Boy, those guys over at the Congressional Budget Office are a cheery lot, aren’t they? 1.4 percent GDP growth for the coming year, unemployment above 7.5 percent, ObamaCare’s cost up to $1.3 trillion, 7 million people losing their insurance… they don’t seem impressed by Obama’s “poised for recovery” high-wire act, do they?
And if that wasn’t depressing enough, remember the CBO is generally optimistic, by design. They tend to assume programs will do roughly what they were supposed to do, and underestimate the depressing effect of taxes and regulations upon the economy. The behavior of the private sector is very difficult to forecast, but in the world of “static analysis,” it functions as the obedient executor of government’s plans.
Obama’s “poised for recovery” act assumes the economy is functioning only a little beneath its optimum level. But to truly “heal” the economy – just to get back to the workforce and growth potential George Bush left behind – we’d need years of growth above 6 percent. I haven’t seen the numbers updated since the election, but if I remember the old projections accurately, we’d need four years of 7 to 8 percent growth to bring the deficit under control and restore the workforce. It’s not easy to rescue the growing class of “unemployables” from the jobless doldrums; marginal workers with long periods of inactivity on their resumes don’t become attractive hires until business is booming.
And of course the CBO can’t predict international events that would shock this weak economy into recession. No one can truly predict the effect of wide-spread credit downgrades on the cost of financing our debt; no debt of this scale has ever stood in such danger before. Responding to credit downgrades like an enraged Third World regime isn’t making us look better to analysts.
The damage from the last four years is deep and systemic. Barack Obama is the true “financial crisis” that we need to “heal” from.