Photo: centre of American Progress
In a column for Bloomberg, former White House budget man Peter Orszag argues that nobody has even yet begun to understand how frail the American economy is, and how long it will take to get back on solid footing.Orszag notes that official government economic predictions—from the Congressional Budget Office (CBO), for instance, which he headed until 2008—tend to crunch numbers based on the letter of the law, rather than on likely real-world scenarios. Thus, “official” economic forecasts are often overly optimistic, and fail to adequately describe the “hard slog” ahead.
More accurate forecasts show an economy unlikely to improve anytime soon—which is really to be expected following a massive financial collapse, Orszag argues:
“If an extended period of slow growth is more likely than the official projections suggest, we’re in for a much nastier mix of high unemployment in the near term and large budget gaps over the medium term. This is only more evidence that the right policy response is a combination of more aggressive action to bolster the job market now and much more deficit reduction enacted now to take effect in a few years. On both strategies, we should be as bold as we can.”
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