CBO Reporting Future GDP Seriously Flaud

Given the new accessibility to information that we all enjoy, nearly all except the 'low information' individual,  the CBO report isn't anything we didn't know already and we all feared was worse the this government reporting institution was telling us.

It one thing to be optimistic about the future but it's another thing to be stupid by ignoring hard facts found in real time. The real time facts about debt and deficits point to economic disaster if we continue on this course of mindless spending and tax increases.

Maybe even worse is the inability of the voters to understand just how bad our situation will be if we don't change course to save our selves from economic ruin. And, after 10 years of voter demands of more free stuff, and  when you are standing in a soup line, cold and miserable, it will extremely difficult to blame George Bush for your situation. But given the ignorance of so many voters in our country that believes money actually comes from an Obama stash, yeah these people could actually blame Bush after 10 years of the Obama revolution to "fundamentally" change America. Pestilence, scarcity, starvation and abject poverty must be someone else's fault, certainly not us, so why not Bush and the Republicans?

Accepting ignorance as a way of life, one must then accept failure as a result of that acceptance. Only in the mind of a progressive socialist liberal, this 'norm' cannot register as a fact. The progressive liberal will never be able to understand basic reality, even when they are subjected to the harshest of these realities.

Questions Raised by the Congressional Budget Office Report
February 12, 2013
Source: Salim Furth, "Questions Raised by the CBO Report," Heritage Foundation, February 5, 2013.

As expected, the Congressional Budget Office (CBO) Budget and Economic Outlook released recently continued the pattern of predicting a strong recovery just two years away. Although CBO's economic approach is typical among forecasters and historically unbiased, the economy's persistent failure to launch as predicted raises questions. Are current conditions of persistent slow growth and high unemployment principally the result of bad luck, uncertain global economic conditions or bad policy, asks Salim Furth, a senior policy analyst at the Heritage Foundation.

• In the 2013 forecast, CBO predicts that the next two years will continue the mediocre, below-potential growth of the past three years.
• After that, its framework dictates that actual gross domestic product (GDP) must spring back toward potential GDP -- an estimate of how much the economy could produce if labor and capital were used at typical intensity and efficiency.
• Since we are far below potential, that means three years (2015-2017) of rapid growth.

This sounds strikingly similar the CBO's Outlook in January 2012 -- and the ones in 2011, 2010 and 2009. Each year the Outlook embodies the spring-back theory of recessions, with a robust recovery beginning two years away.

Another interesting question raised by the Outlook is how much potential GDP has changed as a result of the Great Recession and subsequent policies. Since 2009, CBO's expectation of real GDP in 2019 has slid by 4 percent.

The release of the Budget and Economic Outlook gives economists, policymakers and observers a framework to raise questions about the health and future of the American economy. Beyond the truism that the economy is in a nasty slump, data and theory indicate that the economy is worse than one would expect based on economic factors alone.

The policies of the past five years have systematically harmed the economy in both the short run and the long run. As discouraging as the new CBO Outlook is, reality will probably be worse unless federal policies improve.