Friday, March 27, 2009

Obama Has It Both Ways On the Economy

President Obama's plea Tuesday for patience in the economic turmoil fits with the view of most economists that a turnaround will take some time. It doesn't fit quite so neatly with his bullish budget.




The president's spending plans and deficit projections rest on the assumption that the economy will post solid growth next year after a mild, further decline this year. Many economists think that's too rosy.




Obama was more cautious than that in his prime-time news conference - possibly to the point of having it both ways.




A look at some of his statements and how they square with the facts:



THE CLAIM: "We will recover from this recession. But it will take time, it will take patience, and it will take an understanding that when we all work together, when each of us looks beyond our own short-term interests to the wider set of obligations we have to each other, that's when we succeed."




THE FACTS: No one really knows when the recession will end. But Obama's own budget forecasts the recession will continue through this year but with a relatively shallow 1.2 percent decline in the gross domestic product.




Then, the budget predicts solid 3.2 percent growth for 2010, followed by three years of more than 4 percent growth each year.




Christina Romer, head of the White House Council of Economic Advisers, said this week she was "incredibly confident" the U.S. economy will recover within a year.




Congressional Republicans and some Democratic budget hawks have suggested the Obama budget projections are unduly optimistic to make the math to pay for the president's programs work. The higher the GDP growth, the more tax revenues come in.




Meanwhile, the nonpartisan Congressional Budget Office last week predicted that the Obama budget would produce deficits averaging nearly $1 trillion over the next decade.



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OBAMA: "In this budget, we have made the tough choices necessary to cut our deficit in half by the end of my first term even under the most pessimistic estimates."




THE FACTS: Not all credible estimates foresee a deficit halved in that time.




Obama's budget forecast a deficit of $530 billion by the end of 2013. That would cut by half the deficit he inherited at the start of his term. To succeed, Obama is counting on a recovered economy, a tax boost for the rich and success in easing foreign entanglements. But his assertion that he can accomplish that "even under the most pessimistic estimates" flies in the face of an answer he gave moments later.




The Congressional Budget Office forecasts that Obama's spending plan would leave a deficit of $672 billion by the end of 2013. Explaining the differences between his projections and CBO's, Obama said his administration projects a higher growth rate.



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THE CLAIM: "Our assumptions are perfectly consistent with what blue-chip forecasters out there are saying."




THE FACTS: The Obama administration's economic growth projections are more optimistic over the next five years than those of the Blue Chip Consensus, a monthly average of 50 economic forecasts from the private sector.




The Blue Chip projection is for a deeper contraction this year than is foreseen by the administration --1.9 percent versus 1.2 percent. Then it foresees growth of only 2.1 percent next year, instead of 3.2 percent, and less than 3 percent in each of the next three years, when the administration's forecasts are for 4 percent or better.




After 2015, the blue chip forecast is a little brighter than the administration's.



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THE CLAIM: Obama repeated his assertion that his housing bailout will help "stabilize the housing market and help responsible homeowners stay in their homes."




THE FACTS: Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman have said some of the bailout money is bound to go to those who acted irresponsibly.




Fed Chairman Ben Bernanke has said it's important for the nation to go ahead with the plan even though it means assistance will go to some who should have known better than to get in over their heads.




Sheila Bair, head of the Federal Deposit Insurance Corp., made a similar point when she said it's "simply impractical" to examine every delinquent loan and weed out those taken by people who overstated their income or assets to get a mortgage they couldn't afford.



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THE CLAIM: Responding to Republican critics in Congress who say his proposed budget carries an irresponsible deficit, Obama said, "I suspect that some of those Republican critics have a short memory, because, as I recall, I'm inheriting a $1.3 trillion deficit, annual deficit, from them."




FACT: Obama inherited a whopper of a deficit, much of it due to policies and spending led by Republican President George W. Bush. But the Congress, which authorizes spending and is not blameless in driving up deficits, was controlled by Democrats in the last two years of Bush's presidency.

5 comments:

James Wolfer March 27, 2009 at 5:27 PM  

"Obama was more cautious than that in his prime-time news conference - possibly to the point of having it both ways."

He can't win with you guys, can he? No matter what he says he loses. While there are valid critisms of his policies you are saying he's being too, reserved? Hmmm, you mean a synonyme of conservative?

OBAMA: "In this budget, we have made the tough choices necessary to cut our deficit in half..."

THE FACTS: Not all credible estimates foresee a deficit halved in that time.

Obama's budget forecast a deficit of $530 billion by the end of 2013. That would cut by half the deficit he inherited at the start of his term. ...The Congressional Budget Office forecasts that Obama's spending plan would leave a deficit of $672 billion by the end of 2013...

$672 billion instead of $530B. Okay, so not quite half. Instead of 50%, its 63%. Still better than Bush's deficit.

FACT: Obama inherited a whopper of a deficit, much of it due to policies and spending led by Republican President George W. Bush. But the Congress, which authorizes spending and is not blameless in driving up deficits, was controlled by Democrats in the last two years of Bush's presidency.

FACT: Most of the deficit rising was during the first 6 years of the Bush presidency, during the Republican controlled Congress, NOT during the last two years.

Miss T.C. Shore March 27, 2009 at 11:05 PM  

I love it when you libs criticize Bush for his deficits. Because the solution your Messiah has is to QUADRUPLE the deficits.

It's a false argument, anyway. Each year is a new budget. You don't "inherit" a deficit. Congress can choose to spend what they want, in essence. They've CHOSEN to spend, spend, spend, spend.

Unless your guys show some fiscal restraint, let's not hear any more about Bush's deficit spending. It's not an excuse to spend TRILLIONS of dollars more than Bush. You should know better.

fuzzys dad March 28, 2009 at 4:20 PM  

The Libtards are clueless

2 Conservative Women March 28, 2009 at 11:30 PM  

James Wolfer said...

He can't win with you guys, can he?
---------

Um, no, it's not "you guys", aka the conservatives. This post is from an AP article: FACT CHECK: Obama having it both ways on economy?

More here: FactCheck.org - Obama's Prime Time Pitch: Some exaggerations and misstatements from his evening news conference

Unless of course, you just want to believe everything that Dear Leader says without question.

(NJ-Woman)

James Wolfer March 30, 2009 at 3:55 PM  

Ok, you're right. He is trying to have it both ways. I'll own up to that.

Handbasket:

"I love it when you libs criticize Bush for his deficits. Because the solution your Messiah has is to QUADRUPLE the deficits."

Its only a temporary upping of the deficit. Even your post here says so: "The Congressional Budget Office forecasts that Obama's spending plan would leave a deficit of $672 billion by the end of 2013."

"It's a false argument, anyway. Each year is a new budget. You don't "inherit" a deficit. Congress can choose to spend what they want, in essence. They've CHOSEN to spend, spend, spend, spend."

It's not a false argument. You are having some confusion as to budget deficit and federal deficit (also known as Public Debt). What people are talking about when they say that the deficit doubled under Bush, they are talking about the National Debt, not how much the budget is in the red.

The budget deficit and the national deficit, or public debt, are two different things. George W. Bush and George H.W. Bush both had budgets that spent more than we were bringing in. Clinton's administration balanced the budget, spending less than our revenue was, leaving us with a budget surplus, which if that budget had been kept we could have paid off our national deficit (or public debt) by mid 2008. George W. Bush came into office and between him and the Republican Congress and the budget was in the red again, adding to our national debt.

For example, my wife and I just re-did our household budget. We found about $700 per month that we were spending on things we didn't need to, stopped spending it on those things, leaving us with a budget surplus of $700. Now we are applying that to our debt and will be completely debt free in four years (true story) getting rid of our net worth deficit.

Now if I were Bush, I'd take that $700 a month and spend it instead of paying down my debt, and then I would also take out credit cards and make my student loan payments on those. And then credit cards to pay the first credit card bills. And so on and so on.



"Unless your guys show some fiscal restraint, let's not hear any more about Bush's deficit spending. It's not an excuse to spend TRILLIONS of dollars more than Bush. You should know better."

While spending more initially, even your post shows that the end deficit will be 63% of what it was when Obama took office. I'd say that is fiscal restraint, and a heck of a lot better than Bush's admin.

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