From the Thursday edition of Morning Jolt:
The Next CBO Report Will Be an Incoherent Collection of Shrieks and Giggles
Okay, not really. Just budgetary and financial doom, continuing apace: “The United States is facing profound budgetary and economic challenges. At 8.5 percent of gross domestic product (GDP), the $1.3 trillion budget deficit that the Congressional Budget Office (CBO) projects for 2011 will be the third-largest shortfall in the past 65 years (exceeded only by the deficits of the preceding two years). This year’s deficit stems in part from the long shadow cast on the U.S. economy by the financial crisis and the recent recession. Although economic output began to expand again two years ago, the pace of the recovery has been slow, and the economy remains in a severe slump. Recent turmoil in financial markets in the United States and overseas threatens to prolong the slump. The unemployment rate is projected to fall from 9.1 percent in the second quarter of 2011 to 8.9 percent in the fourth quarter of the year and to 8.5 percent in the fourth quarter of 2012—and then to remain above 8 percent until 2014.”
Footnote: With 8.5 percent unemployment, President Obama does not get reelected. Okay, it’s theoretically possible that the GOP louses things up or Obama runs some sort of fantastic campaign persuading Americans that good times are just around the corner, but . . . in the end, he’s presided over what feels like a four-year recession. As Private Hudson so succinctly summarized, “game over, man, game over.”
In fact, Joseph Lawler observes at the American Spectator, “By the CBO’s projections, the employment situation would be a huge drag for him if he were running in 2016, never mind 2012.”
But J. D. Foster at the Heritage Foundation argues that the whole gloomy picture is, actually, way too cheery: “Yet even this forecast for 2011 seems extremely optimistic given that the current official estimates for annualized growth in the first and second quarters of this year were a negligible 0.4 and 1.3 percent, respectively. To achieve the projected level of growth for the year, either the Bureau of Economic Analysis will need to revise these slow earlier growth rates upwards significantly or the economy will need to grow at an annualized rate of nearly 3.8 percent in the latter half of the year.
“While such an acceleration in growth would be most welcome, it is hard to envision given the recent apparent slowdown in the U.S. economy, stock market jitters, and a slowing of the European economies and a slow-motion sovereign debt meltdown.”
At NRO, Andrew Stiles reports, “All told, the CBO report is bad news for an already struggling economy, and perhaps worse news for the flailing Obama presidency. Not surprisingly, Republicans were quick to pounce on the report. ‘A slight decrease in the projected deficit is nothing to celebrate, particularly when it is accompanied by the grim news that CBO expects the national unemployment rate to continue to exceed 8 percent well past next year,’ House Speaker John Boehner (R., Ohio) said in a statement. ‘The president’s policies were supposed to keep that from happening. Instead they’ve added trillions to our debt at the expense of our children and helped put our nation’s credit rating in jeopardy. Where are the jobs?’”