Yesterday's bombshell revelation of an expected $1.75 TRILLION dollar expected deficit for fiscal year 2009 was paired with the promise from the Obama economic team that fiscal sanity would soon return (with Democrats in charge?) and deficits would start decreasing as the economy recovered.
From Obama's budget blueprint laughingly titled "New Era of Responsibility" [PDF page 114]:
Yet, these assumptions are based on the Obama economic team forecast which even they admit is decidedly more rosy than the Congressional Budget Office and the Blue Chip Economic Indicators [PDF page 132]:
When you are talking about a Gross Domestic Product that at a minimum is above $14 trillion, even a decimal place error in forecasting means huge sums that are not accounted for in the Obama budget. Few budget forecasts by any Administration, Republican or Democrat meet the optimistic targets that often accompany these plans.
Odd, that many of the same Democrats who once touted the authority of the Congressional Budget Office when it challenged President Bush's economic assumptions are eager to dismiss the CBO when it does the same to Obama.
The reality is that Obama's promises about controlling future deficits are about as phony as his promises to cut spending in agencies other than defense or not raise taxes on the Middle Class (cap and trade anyone?)
The recklessness with which Democrats are speeding towards the abyss of financial disaster is breathtaking. There is NO spending restraint. No concentrating scarce financial resources to spur economic growth. Instead we have a drunken orgy of liberalism and socialism running rampant with so little forethought or care as to be truly frightening.
Economists question budget's economic assumptions
February 27, 2009
The administration insists it isn't so, but some private economists are wondering if the Obama administration has brought "Rosy Scenario" back to town.
In unveiling his budget, President Barack Obama pledged to bring "honesty and fairness" back to the budget process by getting rid of the gimmicks past administrations had used to hide the real costs of government programs and proposed tax cuts.
But many economists who examined the economic assumptions that undergird the spending plan believe that Obama may have resorted to one of the oldest gimmicks around — relying on overly optimistic economic assumptions to make it look like you are dealing with soaring budget deficits when in reality you are only closing the gap on paper.
"They used to joke during the Reagan years that the highest-ranking woman in the administration was Rosy Scenario," said Nariman Behravesh, the chief economist at IHS Global Insight, a major private forecasting firm.
Rosy may be back in town, said Behravesh, who called the Obama administration's forecasts "way too optimistic."
For its part, the administration insisted that it hadn't cooked the books to show greater growth, and thus more tax revenues, in coming years. But the administration forecast is far higher than the projections for growth in the overall economy, as measured by the gross domestic product, of many private analysts.
On Friday the government said the economy shrunk by a staggering 6.2 percent in the final quarter of last year, much faster than its earlier GDP estimates. And with layoffs piling up and spending drying up, economists expect rough months ahead.
GDP plays the biggest role in determining the accuracy of deficit forecasts because weaker-than-expected growth swells government payments for such things as unemployment benefits and food stamps and reduces tax receipts.