Diary

Ms. Rosy Scenario Meets Real Life

The awful Obama Administration budget and its promises of deficit reduction are premised on the Administration’s belief that we will have robust growth in the economy within relatively short order.

Trouble is that said assumption has no basis in reality:

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

[. . .]

Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 percent in 2010, with growth accelerating to 4 percent over the next three years.

“It’s a hope, a wing and a prayer,” Mr. Sinai said. “It’s a return to a sanguine view of the economy that is simply not justified.”

If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenue will be lower, forcing the government to cut spending, raise taxes or run larger deficits.

Oh, and if that is not cheery enough, note that people are throwing the word “depression” around. Chances are that it won’t get that bad but these kinds of predictions do feed on themselves, so perhaps, I am being too sanguine. In any event, given that the D-word is being bruited about and that work needs to be done to fight against any hint of a depression coming along, remind me again why it is that the Administration is raising taxes on anyone?

Remember: Government is presumably “reality-based” now.