NY Times, Buffett Criticize Obama Budget Projections
Yesterday, King Banaian took time during the first hour of Final Word to explain why President Obama’s deficit projections weren’t credible. This article in this morning’s NY Times reinforces King’s statements. Here’s what the Times’ article says:
The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.
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.
That’s the polite way of saying President Obama’s deficit projections aren’t worth the paper they’re printed on. For all of his spin that he was serious about cutting the deficit, the reality is that he’ll run up more debt in his first two years than Presidents Bush and Reagan combined.
The lesson we’ve learned, at least if you’re being intellectually honest, is that President Obama’s economic team is incompetent and dishonest. Expecting the FY2010 budget to shrink dramtically because the recession to have not just ended but for the economy to be in a strong recovery is like expecting a miracle to happen.
It’s nice to hope that the deficit will shrink dramatically but it’s important that President Obama changes some of the staff putting these statistics together. I’ll guarantee that this paragraph is giving the Obama administration heartburn:
Rather, economists are using the word depression, a subjective term with no academic definition, to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.
It’s one thing for the White Hosue to argue against statements made by Larry Kudlow. It’s another thing for them to criticize the NY Times. It isn’t easy for the Obama administration because the NY Times is seen as an Obama sympathizer. It’s bad enough to hear the NY Times question the math. It’s worse than that because Warren Buffett, an enthusiastic Obama supporter, is saying the economy will be in shambles for the rest of 2009 and possibly beyond that:
Billionaire Warren Buffett said the economy will be “in shambles” for the rest of this year as financial firms take losses tied to reckless loans made during the housing boom.
Here’s what Allen Sinai said about the Obama administration’s projections:
Allen Sinai, chief global economist at the research firm Decision Economics, sees a 20 percent chance of “a depressionlike possibility,” up from 15 percent a week ago.
“In the housing market, the financial system and the stock market, we’re already there,” Mr. Sinai said. “It is a depression.”
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.”
That’s another polite way of saying the Obama administration is cooking the books. It’s my suggestion that we not take seriously the things that President OBama or his economic team say. They’ve been either wrong or willfully inaccurate with every major economic announcement thus far.
Their forecasting looks more like political spin than scientific forecasting. If that doesn’t change, the Wall Street types will lose all faith in him and his policies.
Thus far, President Obama and his economic team haven’t given professionals a reason to trust their policies or their forecasts. After all, why should these professionals trust the perscription when President Obama’s team misdiagnosed the situation?
Technorati Tags: Economy, Budget Forecast, Rosie Scenario, Warren Buffett, Allen Sinai, President Obama, Commerce Department, Spin, NY Times, Budget Deficits, Depression, Economic Growth
Cross-posted at LetFreedomRingBlog