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The Congressional Budget Office reported that eliminating the automatic budget cuts known as the sequester would add 900,000 jobs to the U.S. economy in 2014. The CBO issued the report in response to a request by Maryland Rep. Chris Van Hollen for an analysis of how a cancellation of the sequester would affect the U.S. economy.
The CBO estimated canceling the sequester would increase the level of real gross domestic product by 0.7 percent and increase the level of employment by 900,000 in the third quarter of calendar year 2014; the number of jobs could range from 300,000 to 1.6 million.
Although output would be greater and employment higher in the next few years if the spending reductions under current law were reversed, the CBO said, that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law.