CBO Report Shows President’s Budget Relies on Rosy Economic Assumptions

[Revmitchell]

So, how is it that CBO and the administration can project such vastly different budget outcomes when examining the exact same set of policies? Most of the difference ($1.3 trillion) comes from the administration’s use of overly optimistic economic projections. By simply assuming an improbably high level of economic growth—along with income and profits, the administration is able to paint a much rosier picture of its budget.

For example, over the 2015–2024 period, the administration assumes the following (all compared to the CBO’s projections):

GDP will be 3 percent higher;
Incomes will be between 1 and 2 percent higher;
Profits will be 10 percent higher;
Tax revenues will be 4 percent higher; and
Interest rates will be between 7 and 9 percent lower

This is not the first time the administration has employed overly optimistic economic projections to garner support for its policies. According to an analysis by the administration’s economists back in 2009, enacting the president’s proposed stimulus package would have prevented the unemployment rate from ever rising above 7.9 percent. Despite passage of the stimulus, the unemployment rate rose to 10 percent, and even today, nearly five years after the recession officially ended, the unemployment rate remains elevated.

http://blog.heritage.org/2014/04/17...ptions/?utm_source=facebook&utm_medium=social

 

[Revmitchell]

Much like the so called 7 million who signed up for Obamacare.

 

[InTheLight]

For example, over the 2015–2024 period, the administration assumes the following (all compared to the CBO’s projections):

GDP will be 3 percent higher;

GDP increased 2.6% in the last reported quarter. So Obama thinks GDP will grow 5.6% continuously for the next 40 quarters? C'mon!

Incomes will be between 1 and 2 percent higher;

That's a possibility for many people, but unlikely to occur across the board.

Profits will be 10 percent higher;

This is not going to happen. If incomes only go up 1 to 2 percent, there is no way that profits are going to increase 10%. Where are companies going to find profit margin increases? They can't increase prices if wages are only going up 1 to 2 percent.

Tax revenues will be 4 percent higher;

If unemployment is dropped to 5% or so this might happen, but it's not happening if incomes only go up 1 to 2 percent.

Interest rates will be between 7 and 9 percent lower

Interest rates are rock bottom right now. So, what, they're going to pay people to take out loans? Plus, the Fed has said they will gradually increase rates.

Who are these loony people making these "projections"?

 

[Revmitchell]

Who are these loony people making these "projections"?

The President in his so called budget.

 

[thisnumbersdisconnected]

GDP increased 2.6% in the last reported quarter. So Obama thinks GDP will grow 5.6% continuously for the next 40 quarters? C'mon!

Needs to be featured on ESPN's "Monday Night Football Pregame" ... :laugh:

That's a possibility for many people, but unlikely to occur across the board.

Only if people are willing to work two part-time jobs of 25 hours each, because employers with less than 50 employees -- and indications are that will be about three-quarters of all employers in the U.S. in the next seven years -- are not going to hire full-time anymore.

This is not going to happen. If incomes only go up 1 to 2 percent, there is no way that profits are going to increase 10%. Where are companies going to find profit margin increases? They can't increase prices if wages are only going up 1 to 2 percent.

Bingo!! Exactly. Hiring means expansion, expansion means increased production, increased production means increased profits.

(Gee whiz, someone who actually understands how business works! Uh ... couldn't be another small business owner, could it? :thumbsup: )

If unemployment is dropped to 5% or so this might happen, but it's not happening if incomes only go up 1 to 2 percent.

Ah, Grasshopper, you have not grasped the pebble! The Little Marxist Dictator is going to raise taxes on everything, one way or another.

Interest rates are rock bottom right now. So, what, they're going to pay people to take out loans? Plus, the Fed has said they will gradually increase rates.

Smoke and mirrors, m'uh boy, smoke and mirrors. That's how they'll do it. Not.

Who are these loony people making these "projections"?

And the Rev answered that one, so I'll let it slide.