Tuesday, August 25, 2009

White House projects economic apocalypse

A national debt three quarters the size of the entire economy. This is completely and utterly unsustainable, unrecoverable. This country, as you know it, is a rotting corpse. Prepare for the worst, because what this government and the Fed are doing, every day, and in the days, weeks, and months to come - if we even have that long - is making the worst case scenario a guarantee.

    Associated Press -

    WASHINGTON – The federal government faces exploding deficits and mounting debt over the next decade, White House officials predicted Tuesday in a fiscal assessment far bleaker than what the Obama administration had estimated just a few months ago.

    Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three-quarters the size of the entire national economy.

    Obama economic adviser Christina Romer predicted unemployment could reach 10 percent this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3 in 2009 and 9.8 percent in 2010.

    "This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," Romer said.

    The grim administration projections came on a day of competing economic news. The Congressional Budget Office, which has predicted less economic growth than the White House in the past, was also scheduled to announce revised budget projections on Tuesday.

    Obama himself may have drowned out the rising deficit news with the announcement Tuesday that he intends to nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The Bernanke news could neutralize any disturbance in the financial markets caused by the high deficit projections.

    The deeper red ink and the gloomy unemployment forecast present President Barack Obama with an enormous challenge. The new numbers come as he prods Congress to enact a major overhaul of the health care system — one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit, but lawmakers have been unable to agree on revenues that cover the cost.

    What's more, the high unemployment could last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.

    Republicans were ready to pounce.

    "The alarm bells on our nation's fiscal condition have now become a siren," Senate Minority Leader Mitch McConnell, R-Ky., said. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone — spending, borrowing and debt are out of control."

    The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year. Romer projected that the economy would expand in 2010, but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.

Now here's the LOL:

    Both Romer and budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that Obama pushed through Congress as one of his first major acts as president.

Austrians have been predicting this outcome from the beginning: they would throw massive amounts of money at the problem, and when it failed miserably they would simply say it would've been worse had they done nothing, and might have been better had they thrown more money around. The answer to the failures of Keynesianism is invariably more Keynesianism. There's more to this article if you feel like being amused, or depressed, whichever.