At The New Republic today, TDS Co-Editor William Galston looks at the economic and budget forecasts recently released by the Office of Management and Budget and the Congressional Budget Office, and sees tough times ahead:
If the consensus these documents represent is in the ballpark, the country and the Obama administration are in for a rough ride. Consider the following:
After shrinking over 2009, real GDP will grow only anemically in 2010 before that growth accelerates for a few years and then subsides to below 3 percent for the second half of the decade.
Unemployment will remain persistently high, averaging about 10 percent in 2010, when Democrats will be trying to defend their recent congressional gains. It will be close to 9 percent in 2011, but remain well above 7 percent as late as 2012, when President Obama presumably will run for reelection.
After years of economic recovery and growth, budget deficits will remain larger throughout the next decade than most economists (and the administration) consider acceptable, raising debt held by the public to between 67.8 percent (CBO) and 76.5 percent (OMB) of GDP by the end of the decade.
Galston goes on to discuss the implications for budget and tax policies of these sobering forecasts. But what he really reinforces is that progressive governance, as always, will ultimately depend on a revival of economic growth.