CBO on the President's Budget

In my most recent Times column about the President's budget, I wrote,

Making matters worse, these bleak budget projections are based on relatively optimistic economic assumptions. The administration forecasts economic growth of 3.0 percent from the fourth quarter of 2009 to the fourth quarter of 2010, followed by 4.3 percent the next year. By contrast, the Congressional Budget Office predicts growth of 2.1 percent and 2.4 percent for these two years. Lower growth would mean less tax revenue, larger budget deficits and a more rapidly increasing debt-to-G.D.P. ratio.

The CBO has now reestimated the budget effects of the President's proposed policies, and indeed the CBO forecasts larger budget deficits. The CBO's total deficit projected over the decade-long budget window is $1.2 trillion larger than the administration's estimate.

The administration projects that the federal government debt held by the public would rise to 77 percent of GDP in 2020 (from 53 percent in 2009).  The CBO forecasts a debt-GDP ratio in 2020 of 90 percent.

Economics in One Picture

Source.  Thanks to Joshua Gans for the pointer.

Rogoff on Japan

Ken says it is not a pretty picture.

Gorton on the Financial Crisis

Yale economist Gary Gorton offers a very readable Q&A explaining his view of recent events.

Life Expectancy at Retirement

Source: The Economist.  Click on graphic to enlarge.

Americans, as well as citizens of many other advanced nations, now spend about twice as many years in retirement as they did a generation or two ago.  During that time, they expect the government to provide them with income support and healthcare.  Is it any wonder that we face serious fiscal problems?

I hope the president's fiscal commission makes raising the age of eligibility for these programs one of its main recommendations.

Just a Spelling Lesson

Quite a few readers have emailed me comments on my new paper Spreading the Wealth Around: Reflections Inspired by Joe the Plumber.  I appreciate the input.

The most frequent comment is to point out an alleged error: "just deserts" should be "just desserts," I am told.

So here I am with a spelling lesson: In the expression just deserts, the word deserts means that which one deserves.  It may be pronounced like the sweet things you eat after a meal, but it is spelled like the spans of dry land.

For example, consider this dialogue:

Father: If you eat all your vegetables, Bobby, you can have a cookie and ice cream after dinner.

Bobby: Will you also pay me a dollar, Daddy?

Father: No, Bobby.  If you eat all your vegetables, your just deserts are just desserts.

By the way, another reader points out that yesterday's Doonesbury is related to the topic of Just Deserts Theory.

A New Member of the Pigou Club

Thomas Friedman reports:

[Senator Lindsey Graham, the South Carolina Republican,] proposes “putting a price on carbon,” starting with a very focused carbon tax, as opposed to an economywide cap-and-trade system, so as to spur both consumers and industries to invest in and buy new clean energy products.