Obama Budget Relies on Rosy Growth Estimates

By John Johnson, Newser Staff

Posted Feb 26, 2009 5:38 PM CST

(Newser) – President Obama is more optimistic about the nation's economic prospects than most economists, Bloomberg reports. His budget plan forecasts a GDP contraction of 1.2% this year, followed by a 3.2% expansion in 2010. The median forecast of economists calls for a contraction of 2% this year and growth of 1.8% next year. If the economists are right, Obama's pledge to cut the nation's deficit—from a staggering $1.75 trillion in 2009 to $533 million by 2013—is in trouble.

The discrepancy in forecasts is easy to explain, says a former White House economist who advised candidate McCain. “You cannot put out a projection that says, ‘At the end of my first term, my economic policies haven’t worked,’” he said. Doing so is tantamount to forecasting "failure." As a result, “you get some really rapid growth rates late in the game.”

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Copies of President Obama's budget for fiscal 2010 are picked up at the U.S. Government Printing Office in Washington, Thursday, Feb. 26, 2009. (AP Photo/Pablo Martinez Monsivais)

President Barack Obama speaks about his fiscal 2010 federal budget Thursday. (AP Photo/Charles Dharapak)

Budget Director Peter Orszag, right, and Treasury Secretary Tim Geithner, center, look on as President Barack Obama speaks about his fiscal 2010 federal budget. (AP Photo/Charles Dharapak)

Humberto Sanchez, from Congress Daily, reads over a copy of President Obama's budget for fiscal 2010. (AP Photo/Pablo Martinez Monsivais)

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We’re very much aware that we’re a little less pessimistic than some forecasts, but I think the crucial thing is we’re very much in the same ballpark.
- Christian Romer, chairman of the White House’s Council of Economic Advisers

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