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Wednesday, August 26, 2009

Another Jobless Recovery, Even with a Deficit Spike

The Office of Management and Budget just came out with their revised Mid-Session Review budget of the U.S. Paul Krugman commented:

What everyone should be focused on is the sheer awfulness of the economic projections. OMB has unemployment still at 9.7% at the end of 2010; still at 8% at the end of 2011. These numbers cry out for a more aggressive economic policy. If that’s politically impossible, we’re really in terrible shape.
True, the projections are for a "recovery" with a 9.7% unemployment rate in 2010 and 8.6% in 2011 (not sure how much of a recovery it will feel like).

But, how much more aggressive should the government be? While Krugman may be right that it isn't enough, it is a solid $2 Trillion more than was previously budgeted. Politico details:
The White House Office of Management and Budget’s Mid-Session Review, an annual update between budgets, put the 10-year deficit estimate at $9.051 trillion, up from the previously projected $7 trillion. The administration had leaked the figure over the weekend.

How large is $9 trillion? Well, it is about $3 trillion more than the cumulative deficit from 1980-2009 (ignores inflation, but a sizable chunk of change none-the-less).