We have heard throughout the media (and especially from every right wing pundit) about Obama's down payment on some form of national health care, his carbon cap and trade plan, and the general size of the budget/deficit. We have also heard about Obama's plan to cut his deficit (the 2009 one) in half by 2013 (although still to a far too large $500 billion). What we haven't really heard is the details of cutting this deficit, and the devil is always in the details.
You see, in order to get the deficit cut in half by 2013, the Obama Administration relied on some fairly rosy GDP growth scenarios that are an almost Bushesque use of numbersmithing. Here are the Obama budget GDP estimates, followed by the estimates from the Blue Chip Economic Indicators Forcasters:
Obama
2009 - (1.2)%
2010 - 3.2%
2011 - 4%
2012 - 4.6%
2013 - 4.2%
Blue Chip
2009 - (1.9)%
2010 - 2.1%
2011 - 2.9%
2012 - 2.9%
2013 - 2.8%
Now, I think we can all admit here that the second set are much more realistic based on what we know about the economy today, which brings us to why this is very important. You see, GDP growth essentially will determine the amount of revenue the government collects, so by using the rosy scenario above, Obama is able to show that he can actually cut the deficit to ONLY $500 billion by 2013. Without those rosy GDP numbers, the deficit would stay much larger and debt would increase at a much faster pace over the next 4-5 years, making much of his proposed budget probably impossible to afford.
The reason this matters to all of us, is that should the proposed budget pass as is (or roughly with the same price tag) and we do not hit/exceed the Obama GDP numbers, we will likely be in for additional economic pain going forward from deficit related interest rate increases and probably inflation through dollar devaluation.
I am not looking to badger Obama about what is in the budget exactly, but would like to know where his GDP numbers come from and why they are at odds with forecasts from independent sources, as this has a big impact on his final budget projections. I thought we were going to get an honest budget process, but it looks to me like all we got was honesty on the costs, with dishonesty on the revenue projections.