Tuesday, September 1, 2009

Is $9 trillion estimate on deficit too low?

The midyear budget corrections from the White House and the CBO have been issued, and the item most people talk about is the fact that the White House increased its deficit estimates $2 trillion from the $7 trillion that had been the centerpiece of their economic policy back in January to approximately $9 trillion.

Most pundits have pointed this out, but some economists have started to observe that even the $9 trillion estimate of the CBO is potentially only 66% of the true deficit we shall see in the next ten years.

The best place to see this graphically is at the site of the Concord Coalition. They have a graph showing that they agree with the 2009 and 2010 estimates, but then diverge from the CBO estimates and predict higher deficits throughout the decade. However, they are willing to point out why: (more)

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