James Pethokoukis

Politics and policy from inside Washington

Obama’s fantasy growth forecast

June 17, 2011

Another downgrade for the US economy:

(Reuters) – The International Monetary Fund cut its forecast for U.S. economic growth on Friday and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits.

The IMF, in its regular assessment of global economic prospects, said that bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies.

The global lender forecast that U.S. gross domestic product would grow an anemic 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively.

Let’s recall the White House forecast from February:

Looking ahead, the Administration projects moderate GDP growth of 3.1 percent in 2011, with growth then rising to an average rate of 4.1 percent during the next four years.

Speaks for itself, I think

 

 

 

Comments

US taxes are at the lowest rates in modern history.

US corporations are paying taxes a a rate that is roughly 1.8% of GDP, also near historic lows.

Obamanomics is a carry forward of what Bush and the Republicans set in motion with little change except the bailouts that began with TARP and QE1 & QE2…which appears to be the only factor holding the economy afloat.

Add the Greek and other European financial issues, and high oil prices, and the time bomb is ticking…

Obama has repeatedly asked for tax increases on those earning above $250,000/year and has been denied again and again.

Historic tax rates under Reagan and Clinton were higher and using them as a benchmark, the tax rates should be adjusted upward.

Obama isn’t the problem, it is the disingenuous attempt to blame Obama for Bush policies that have not been allowed to change.

Remember, there were no tax revenue increases for the two wars, for the record expansion of government (TSA & Homeland Securtiy agencies) and Medicare Part D. None, zero, zilch, nada…

Deficits do matter Mr. Cheney…and for all other Republican Shills working to spin the issue against the Dems or this President, please stop the bull.

Posted by NobleKin | Report as abusive
 

Democrats controlled both houses of congress and the presidency for 18 months with filibuster proof majorities.

Yet they did not raise taxes or cut spending when they had the opportunity. Instead they increased spending by a trillion plus, gave the money to their union cronies, and made things worse.

And, Democrats have controlled the creation, passage, and, sending to whomever was president, of spending bills for all but a couple of the last 40+ years.

Presidents sign or veto spending bills, they don’t write them.

Blaming Bush and the Republicans is down right silly.

As you stated NobleKin, please stop the bull.

Posted by bobw111 | Report as abusive
 

I think it also matters that the Administration, the Congressional Budget Office, the Federal Reserve and others base projections and actions on reality. Just my 2¢, but we seem to have an ongoing pattern of forecasting better results than we end up seeing, and a pattern of understimating or minimizing potential risks. I think at least some of this is due to political considerations or from what I see as a misguided desire to “reassure” the people, the markets, etc. Maybe the intentions are good, but I think the result is to make it harder to make the changes we need to make.

Posted by FlBob | Report as abusive
 

Markets are a beast of their own – blaming and taking credit for what the markets do is a load of crap. Sure politicians can grease wheels – knock down a few road blocks but at the end of the day – markets are global and no one country or its policies can stop what the markets do. What china, india…and every other country does, effects America more than any American politician. Look at tiny Greece toppling the euro zone and effecting America and the global markets (what did Greece have to sell or trade to begin with?). Silly. Open your eyes every single country has lost their sovereignty to the markets. Put the blame where it belongs and ask yourself just what exactly the “markets” are and are they worth all the trouble they cause.

Posted by WhiteSwan | Report as abusive
 

A deficit of 9.9 percent. A gross debt of 14.3 trillion (95%).

And then the audacity of the US government of reporting net debt (65 %)only. You know what that means ? That the US is not serious about paying the state pensions funds back. Ever. That is what reporting net debt means.

Posted by FBreughel1 | Report as abusive
 

@bobw111

Prove that a trillion was “handed to union cronies” based on Democrat spending policy. Show us all your evidence…

You cannot make such a claim without backing it up…well yes you can, Rush, Hannity and the rest of the Republican Mob leaders do it all the time, but that doesn’t make it fact.

Your retort is absurd. Budget proposals are submitted by Presidents each and every year. Indeed they are passed by congress, but the tone and our collective direction is set by the President.

And Reagan, HW Bush and W Bush all had veto power and didn’t use it.

Who was in charge of Congress when Medicare Part D was passed? Who was in charge when Department of Homeland Security was Created? Who was in charge with lowering taxes to the lowest rate in modern history? Who wan in charge when we shifted attention away from Afghanistan and plunged into an invasion of Iraq and the “emergency spending” that was handed to Brown and Root and others? Add TARP, and the runaway economic implosion started in 2007, the financial meltdown of 2008 with the housing and banking sectors…add that up please and tell us what you get? Who was the executive in charge?

When did Obama take over?

Please, tell us…

Do we have two wars that cost over a $trillion without revenue to pay for them? Yes we do. And much of the revenue spent from 2003 to 2008 was not reported…and it was funded with “emergency funding”…which has been fully reported by Obama and skews his numbers dramatically and truthfully upward from Bush’s reporting.

Did the Republicans pass a bill in the middle of night on a Friday (Medicare Part D) that hands hundreds of millions to Big Pharma without increasing revenue to pay for it? Yes they did. (and it is what is sending Medicare over the edge)

Did the Republicans expand our nations government at a record pace via TSA and Homeland Security with no revenue to support the effort? Yes they did.

You are delusional if you want to blame Democrats for the 40 year you claim. The Tripling of the deficit occurred under Reagan…which Dick Cheney sited as a reason why “Deficits don’t matter” and why the eight years under Bush were incredible no-tax-and-spend years that superheated our deficit spending and were exacerbated by the Great Recession and corresponding revenue shortfalls.

I don’t care if you don’t like the truth because you are a Republican first, American second citizen, but it remains the truth nonetheless.

Posted by NobleKin | Report as abusive
 

Regarding the 18 months…there is a decided difference from the period prior to 2007 and the period after, and the tools available to combat the deficit and the economy simultaneously.

Yes, it appears Obama used Republican tax strategy as a way to boost the economy. But Trickle Down economics has again proven it doesn’t work.

This President has not just been facing a deficit problem, he has been facing a financial crisis, housing crisis, jobs crisis, oil price crisis, the worst Recession in history (not counting the Depression)…

So again it is disingenuous to work to frame the Democrats for the measures they’ve taken…they are the measures the Republicans have said would work. (Record low taxes, remember?)

And there aren’t any credible economists who don’t agree that the stimulus spending is the only thing keeping the economy from the abyss.

Remarkably, this is the first recession in history where corporations are posting record profits.

Posted by NobleKin | Report as abusive
 

“And there aren’t any credible economists who don’t agree that the stimulus spending is the only thing keeping the economy from the abyss.”

If we continue spending money we don’t have, borrowing and “printing” it as we go, how long will the abyss be avoided? What happened with real estate when the tax credits ended? IMO, much of the short term boost was basically from “stealing” future demand and whether the net gain was significant is debatable. Short term boosts are not the long term solutions we have to find, and I think recent economic reports and employment statistics bear that out.
I’m not saying all stimulus spending is bad, but it seems to me like a bandaid approach to a major injury.

Posted by FlBob | Report as abusive
 

Blaming Bush and the Republicans, or indeed, blaming any single political persuasion for the current situation is an oversimplification. (NobleKin, bobw111 never said he was a Republican, so your accusation lacks merit. Many of your other points were on the mark though.)

Both parties have spent like drunken sailors in recent history. And indeed, it is wrong to spend money without having the means to pay for it. When a family runs into that situation, a responsible family will lower their spending to match their income. An irresponsible family will put their spending on the credit cards.

One might claim that the U.S. can “increase its income” by simply raising taxes, but that’s, to put it bluntly, a fairy-tale. The “income” of a country doesn’t come from taxes; rather, it comes from the productivity of its citizens relative to the citizens of other countries. The U.S. has been hit hard by the results of globalization; many jobs that used to provide productivity and income for U.S. citizens are now providing it instead for the citizens of China, India, Brazil, and others. THAT is what has caused the “decrease in income” for the U.S. — raising taxes is just shuffling the decreased overall income between parts of the U.S.; it is not truly an income increase.

Posted by Randy549 | Report as abusive
 

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