[lbo-talk] liberal austerity

[Politicus E.]

Hi.  I am reading the CBO report on the Obama adminstration's budget
proposal, and find myself somewhat puzzled.  On the one hand, I believe that
an orthodox austerity program might be on the agenda in future fiscal
years.  On the other hand, the CBO report does not confirm my view.
According to their forcasts, which must be taken with more than a bit of
skepticism in light of the failure of many macroeconomic models to predict
this economic crisis, the on-budget deficit will be 14.1% of GDP in 2009,
10.4% in 2010, 7.3% in 2011, and about 5% by the time of the next
presidential election.

That does not, on the face of it, seem to be an austerity program.
According to the today's WSJ, most "centrists" & "moderates" are attempting
to hold the line at 3%.  Reading Doug's post on Timmy & the Establishment,
perhaps we can interpret the 3% line to be the maximum that the hawks are
willing to concede to Obama's budget under the circumstances.  In other
words, if they are doing it because they have to, not because they want to,
then they must operate strictly within the 3% parameter.  But that does not
speak to any cuts that might be coming in future fiscal years.

I still need to read the whole CBO report, but if they do implement an
austerity plan, I wonder which programs will be targeted.  It seems that
privitization of pensions is off-the-table for now, although I'm not willing
to put too much weight on this belief.  I wonder if anyone has thoughts on
this.  There's also this Volcker-led tax "reform" commission to consider.

ep