[lbo-talk] liberal austerity

Doug Henwood dhenwood at panix.com
Thu Mar 26 08:39:48 PDT 2009


On Mar 26, 2009, at 11:14 AM, Politicus E. wrote:


> 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.

CBO projections are cautious in the sense that they mostly extrapolate the present into the future. There's no austerity baked in right now, but it wouldn't surprise me at all to see it evolve in the coming months. Important agents of austerity could well be the dozen or so Senate Dems who are resisting the leadership's push to make the budget pass with only 51 votes, and not the full filibuster-proof 60.

Doug



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