The Biggest Flaw In Obama’s Budget

As is typically the case, the White House’s rosy budget projections rely on getting one thing right that they have very little control over:

Mr. Obama’s budget also assumes annual economic growth of more than 4% from 2012-2014. That’s far more robust than anything this recovery has produced so far, and it is at least a percentage point higher than most private economists or the Congressional Budget Office predict.

If real economic growth turns out to be closer to the 3-3.5% range that some economists predict, or lower, than all those rose deficit numbers you’re hearing from the White House are so much nonsense.

H/T: Andrew Sullivan

FILED UNDER: Barack Obama, Deficit and Debt, Economics and Business, Politicians, Quick Takes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. JD says:

    It also assumes over 65% growth in federal revenues in the next four years.

  2. Brummagem Joe says:

    “That’s far more robust than anything this recovery has produced so far, and it is at least a percentage point higher than most private economists or the Congressional Budget Office predict.”

    I think the CBO forecast is 3.2% but there’s actually a growing consensus among private economic forecasters that the 2011 number will be at or in excess of 4%. So it’s by no means nonsense.

  3. Brummagem Joe says:

    “It also assumes over 65% growth in federal revenues in the next four years.”

    Since tax revenues are at the lowest share of GDP for sixty years because of the recession and Bush tax cuts it’s not unreasonable to assume sizeable jumps in revenue since they are making certain assumptions about growth (which you can disagree with but certainly are not nonsense as Doug suggests) and are allowing the Bush cuts to expire. There’s also the closure of a lot of corporate loopholes. These guys can add up.

  4. Pug says:

    It’s the old “rosy scenario”. They learned it from Reagan.

    Overestimate revenues and underestimate spending. Do it consistently for a long time.

  5. Drew says:

    Isn’t there a song that opens with the line “I like dreaming….”