Economics

How Much Responsibility Can America Withstand?

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The Congressional Budget Office says federal deficits will total $9.3 trillion during the next decade if Congress implements President Obama's fiscal proposals. That's $4.9 trillion more than the "baseline" projection (i.e., what would happen with no changes in law or policy) and $2.3 trillion higher than the Obama administration's own estimate. According to The New York Times, Peter Orszag, Obama's budget director, attributed the discrepancy "in part to small percentages—such as divergent assumptions about the rate of economic growth—that, when applied to huge numbers, can produce eye-popping contrasts."

Yet Orszag himself has admitted that the economic assumptions embodied in the president's $3.6 trillion budget plan no longer appear plausible. "Since the time when both the Administration and the [January] CBO forecasts were completed," he wrote on the Office of Management and Budget blog at the end of February, "incoming data suggest that the economy was even weaker at the end of last year than previously understood." Today Orszag conceded "that annual deficits of 4 to 5 percent of gross domestic product, as envisioned in the office's report, are 'ultimately not sustainable.'" But he also argues that the worsening economic outlook that underlies the CBO's increasingly alarming fiscal projections is a reason to spend more, not less:

The CBO report only underscores the severity of the economic and fiscal crisis the Administration has inherited. There is need for urgent action to get our economy moving again, invest for the future, and put the nation on a sustainable fiscal path….The new CBO numbers do not change our commitment to these goals or our ability to achieve them.

The CBO's analysis is available here. The OMB's response is here. More on Obama's counterintuitive understanding of fiscal responsibility here and here

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  1. Please stop.

    Thank you.

  2. Let me get this straight. Your complaining about Obama’s spending?!!!!……Where were the complaints when Bush was blowing whads of taxpayer dough?………Hmmm?…I didn’t hear you. I guess it didn’t matter then since he was spending it killing innocent women and children and securing your ability to fill up a huge suv with gasoline.

  3. “Today Orszag conceded “that annual deficits of 4 to 5 percent of gross domestic product, as envisioned in the office’s report, are ‘ultimately not sustainable.'””

    “Please stop.”

    Of course they will. They have to. Because they are HUGE fans of sustainability.

  4. I feel like I’m taking crazy pills. Why do we have to have two parties of insane people to turn to in this country? And they say the LP is full of nuts.

  5. Hussien The Greatest! | March 20, 2009, 5:19pm | #

    Let me get this straight. Your complaining about Obama’s spending?!!!!……Where were the complaints when Bush was blowing whads of taxpayer dough?………

    Pick any week in the blog archives from the Bush years and you will find plenty of complaints about Bush busting the budget. Welcome to the blog Hussien. I was wondering who would replace Joe.

  6. Calling congress a bunch of insane whores is an insult to both psychiatric clients and prostitutes.

  7. ANNOUNCEMENT! THERE ARE MORE THAN TWO SIDES IN AMERICAN POLITICS!

    THANK YOU!

  8. Yet Orszag himself has admitted that the economic assumptions embodied in the president’s $3.6 trillion budget plan no longer appear plausible.

    Nooooo…. You think?!?

  9. It probably won’t actually get this grim, but I can just imagine DC shipping the “volunteers” from the GIVE program to our creditors to pay of the debt with labor.

  10. Oh, Reason has certainly whined and moaned a lot over the years. Now, for those of you who say they’re just paper tigers who’ve never actually done anything that had an impact, I’ve compiled a list of all the things that they’ve actually done:

  11. Oops! Sorry, I forgot the list of all the things Reason has actually done.

    Here it is:

  12. The CBO report only underscores the severity of the economic and fiscal crisis the Administration has inherited. There is need for urgent action to get our economy moving again, invest for the future, and put the nation on a sustainable fiscal path

    Oh, man…. I don’t know what to think. Every time some moron says that there’s an urgent need for “action”, it only emphasizes his or her lack of understanding of economics – the government CANNOT FIX THIS! It can only make it worse!

    Don’t do anything! Please! Let us, the people, fix the problem.

  13. Drat! There are so many items on the list, I set the font size to a real low number and it’s not legible. Here, let me increase it a bit:

  14. More on [Il Duce]’s counterintuitive understanding of fiscal responsibility here and here.

    “Counterintuitive”? Oh, you’re too nice.

    I call it “Totally idiotic”.

  15. Let me get this straight. Your complaining about Obama’s spending?[…]Where were the complaints when Bush was blowing wads of taxpayer dough?

    Il Duce’s mistake is that he did not waste money in trickles, during 8 years, but in a massive, wow-wee, shock & awe, bedazzling way – in a few weeks.

  16. The Congressional Budget Office says federal deficits will total $9.3 trillion during the next decade if Congress implements President Obama’s fiscal proposals.

    Paul “Hey, I’m on NPR again” Krugman says this isn’t big enough.

  17. Orange Line Special, I can add one item to your list. Helped get a municiple blue law repealed. Yeah, it’s not much, but it is something. Attending town hall meetings yields much more results per effort than attending political meetings. If you can stomach hearing opposing viewpoints for the vast majority of your time there and still keep the discord civil, I highly recommend it.

  18. If there is a subject about which Obama is not wholly ignorant I have yet to see evidence of it. Bush spent more than he should have but ultimately he was the only one who tried to head off the current crisis having warned congress early and often that Fannie and Freddie were disasters waiting to happen. At least we got some tax cuts out of him… even if the Republicans in congress were stupid enough to put an expiration date on them.

    Obama is going to run this mother into the ground and the press is going to cheer every step of the way. And the irony is that all of the overwrought criticism of Bush and the war on terror helped poison the ideological well to the point that the people have embraced a true tyrant of the sort that previously only Europeans could love.

    Good going there guys. At least we won’t have to worry about anyone listening in on our phone calls to Afghanistan while we enjoy our stagflation and do our time in the civilian defense forces. Yeah, that was a REALLY good trade.

  19. ANNOUNCEMENT! THERE ARE MORE THAN TWO SIDES IN AMERICAN POLITICS!

    THANK YOU!

    You’ve lost it, haven’t you PL?

  20. At least we won’t have to worry about anyone listening in on our phone calls to Afghanistan while we enjoy our stagflation and do our time in the civilian defense forces.

    I’d bet an Obama Bill (read: lotsa moohla) they’ll be listening in on your phone calls anyway. Don’t forget there’s still that war on terror to fight. Why do you think we’re ramping up Afghanistan?

  21. Losing it is the only rational response to the current situation.

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