RNC: Welcome Back Rosy, Have Democrats Traded One Form of Deception for Another in the Budget Process? 

Private Economists Wonder If Democrats Have Brought "Rosy Scenario" Back To Washington

by Impact Wire Friday, February 27, 2009
To: POLITICAL EDITORS
Contact: Republican National Committee, +1-202-863-8614

The following was released today by the Republican National Committee:

At The Fiscal Responsibility Summit, President Obama Pledged To Introduce An
Honest Budget That Is Free Of Gimmicks AndDeception:

President Obama Pledged To Introduce A Budget That Is An Honest
Accounting Of The Financial Situation. President Obama: "And that's why the budget I will introduce later this week will look ahead 10 years and will include a full and honest accounting of the money we plan to spend and the deficits we will likely incur. To start reducing these deficits, I've committed to going through our budget line by line to root out waste and inefficiency, a process that Peter and our administration, our team, has already begun. And I'll soon be instructing each member of my cabinet to go through every item in their budgets as well." (President Barack Obama, Remarks To The Fiscal Responsibility Summit, Washington, DC, 2/23/09)

President Obama: "Our Budget Process In Washington Has Been An Exercise In Deception."

President Obama: "We'll start by being honest with ourselves about the magnitude of our deficits. For too long, our budget process in Washington has been an exercise in deception, a series of accounting tricks to hide the extent of our spending and the shortfalls in our revenue and hope that the American people won't notice; budgeting certain expenditures for just one year, when we know we'll incur them every year for five or 10; budgeting zero dollars for the Iraq war - zero - for future years even when we knew the war would continue; budgeting no money for natural disasters, as if we would ever go 12 months without a single flood, fire, hurricane or earthquake." (President Barack Obama, Remarks To The Fiscal Responsibility Summit, Washington, DC, 2/23/09)

President Obama: "We do ourselves no favors by hiding the truth about what we spend. In order to address our fiscal crisis, we're going to have to be candid about its scope." (President Barack Obama, Remarks To The Fiscal Responsibility Summit, Washington, DC, 2/23/09)

The New Democrat Budget Has People Wondering If "Rosy Scenario" Is Back In Washington:

Private Economists Wonder If Democrats Have Brought "Rosy Scenario" Back To Washington. "The administration insists it isn't so, but some private economists are wondering if the Obama administration has brought 'Rosy Scenario' back to town." (Martin Crutsinger, "Economists Question Budget's Economic Assumptions," The Associated Press, 2/27/09)

Many Economists Say The Democrat Budget Uses "One Of The Oldest Gimmicks Around" By Relying On Overly Optimistic Economic Assumptions. "But many economists who examined the economic assumptions that undergird the spending plan believe that Obama may have resorted to one of the oldest gimmicks around - relying on overly optimistic economic assumptions to make it look like you are dealing with soaring budget deficits when in reality you are only closing the gap on paper." (Martin Crutsinger, "Economists Question Budget's Economic Assumptions," The Associated Press, 2/27/09)

In Order To Achieve The Deficit Cutting That Democrats Hope For, The Economy Would Have To Grow At Levels Similar To The Boom Of The 1990s. "The Obama budget puts the deficit at less than $600 billion starting in 2012 from $1.75 trillion this year. Getting to that point requires GDP to rise more than 4% a year by then -- meaning the U.S. would quickly return to growth rates similar to the boom years of the 1990s -- after the worst financial shock since the Great Depression. Such growth is more than a full percentage point above private-sector growth estimates for 2011 and 2012." (Sudeep Reddy, "Rosy Assumptions Hold Down Deficit," The Wall Street Journal, 2/27/09)
Economic Forecasts In The Democrat Budget Are Much Higher Than Private Forecasts:

The Economic Forecasts In The Democrat Budget Are "Far Higher" Than Many Private Analysts. "But the administration forecast is far higher than the projections for growth in the overall economy, as measured by the gross domestic product, of many private analysts." (Martin Crutsinger, "Economists Question Budget's Economic Assumptions," The Associated Press, 2/27/09)

Democrats Predict The GDP Will Grow By More Than 4 Percent In 2011, 2012, And 2013. "In its budget, the administration predicted that the overall economy, as measured by the gross domestic product, will shrink by 1.2 percent this year but will grow by a solid 3.2 percent in 2010. That growth would be followed by even stronger increases of 4 percent in 2011, 4.6 percent in 2012 and 4.2 percent in 2013." (Martin Crutsinger, "Economists Question Budget's Economic Assumptions," The Associated Press, 2/27/09)

Private Forecasters Agree That The GDP Will Not Grow As Much As The White House Forecasters Predict. "By contrast, the consensus of forecasters surveyed by Blue Chip Economic Indicators in February predicted that the GDP will fall by a larger 1.9 percent this year and then increase at weaker rates of 2.1 percent in 2010, 2.9 percent in 2011 and 2012 and 2.8 percent in 2013." (Martin Crutsinger, "Economists Question Budget's Economic Assumptions," The Associated Press, 2/27/09)

A Top White House Official Admitted That Budget Estimates Were More Optimistic Than Private Forecasts:

White House Economist Christina Romer Admitted That The Democrats' Economic Forecasts Are "Somewhat More Optimistic" Than Private Economists. "Speaking to reporters Thursday, White House economist Christina Romer called the projections an 'honest forecast' by the administration's professional forecasters. 'I'd reject the premise that we're noticeably rosier,' she said. 'We certainly are somewhat more optimistic, but certainly nothing out of the ballpark.'" (Sudeep Reddy, "Rosy Assumptions Hold Down Deficit," The Wall Street Journal, 2/27/09)

The Budget Relies On An Estimate That The Unemployment Rate Will Be 7.9 Percent In 2010, 1.6 Percent Lower Than Last Year's Most Accurate Forecasters:

The Obama Administration Anticipates The Unemployment Rate To Fall To 7.9 Percent In 2010. "Most Fed officials, who have repeatedly proven to be too hopeful about a recovery, see the unemployment rate between 8.5% and 8.8% in the fourth quarter of 2009 and around 8% to 8.3% in late 2010. The administration puts the 2010 annual average at 7.9%, even though Fed officials and most private forecasters expect joblessness to remain well above 8% - and in some cases closer to 9% - through much of the year." (Sudeep Reddy, "Rosy Assumptions Hold Down Deficit," The Wall Street Journal, 2/27/09)

Economists At Goldman Sachs Estimate The Unemployment Rate To Be 9.5 Percent In 2010. "Goldman Sachs economists, whose forecasts were among the most accurate last year, expect the unemployment rate to be at 9.5% by late 2010." (Sudeep Reddy, "Rosy Assumptions Hold Down Deficit," The Wall Street Journal, 2/27/09)

SOURCE Republican National Committee

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