This story tells us the following…
WASHINGTON – In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America’s founding. And it says by the next decade’s end the national debt will equal three-quarters of the entire U.S. economy.
But before President Barack Obama can do much about it, he’ll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.
(Funny, but I don’t recall hearing stories like this about 10-year budget projections when Obama’s predecessor took up space in An Oval Office.)
But concerning the story, we find out the following near the end…
At the same time, 10-year budget projections can be “wildly inaccurate,” said (former BCO official Stan) Collender, now a partner at Qorvis Communications. Collender noted that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.
And of course, since we’re talking about the AP after all, God forbid that they omit the “Ooga Booga!” scare graf in the lede, right? And who cares whether it’s 100 percent factually correct.
Yes, this is bad stuff, I know. But considering that Obama inherited a $1.3 trillion dollar deficit, only a teabaggin’ fool would believe he could turn that around in a mere matter of months.
And of course, for good measure, former Bush economic advisor N. Gregory Mankiw chimes in here that it may be $14 trillion (past Mankiw ignominies on behalf of the former Bushco cabal are documented here).
Also, I fail to understand yet again why Mankiw is considered some kind of an economic sage, since he surely should have known what would happen to the deficit as a result of Dubya’s Medicare Part D scam, noted by Brad DeLong here (and wasn’t it “Deadeye Dick” Cheney who told us here that “Reagan proved that deficits don’t matter”).
Fortunately, we have the reality-based commentary of Paul Krugman (here)…
As I’ve pointed out, (the deficit is) bad, but it’s not horrific either by historical or international standards. On a comparable basis, federal debt hit 109 percent of GDP at the end of World War II, and hit a second peak of 49 percent at the end of the Reagan-Bush years. And a number of European countries have hit substantially higher debt levels without crisis.
The only reason to fear these numbers is if you believe that our political system is broken, and that markets will soon come to see it that way. Then we could become a debt-intolerant country, and all bets are off. So it’s not really the debts per se, or even the economy; it’s the politics, stupid.
Meanwhile, what everyone should be focused on is the sheer awfulness of the economic projections. OMB has unemployment still at 9.7% at the end of 2010; still at 8% at the end of 2011. These numbers cry out for a more aggressive economic policy. If that’s politically impossible, we’re really in terrible shape.
“Stimulus Two,” anyone?