Obama’s Office of Management and Budget predicts the deficit to be $1.47 trillion for 2010, falling to $1.42 trillion for 2011. They are puffing this up as an indicator that things are headed in the right direction. It probably helps them to make this prediction in that Congress refused to pass a budget for FY 2011 (which starts October 1st) and thus you can paint whatever picture you like. It also helps if you just lie stupidly and hope that no one notices. Most people haven’t – but over at Zero Hedge, they have. That deficit number is based upon a number of rosy scenarios – not least of which is OMB’s predictions on the job market:
…just the natural growth of America will have added 8.6 million vacancies to the labor force from December 2007 through the end of 2015. And since the economy is already in the hole to the tune of 7.5 million jobs from the 2007 peak, the OMB is effectively stating that it can bridge the shortfall of 16 million jobs in the next 5 years. Why, sure they can – if they can somehow create 245k jobs each month for the next 66 months. Alas, as the data demonstrates, the only time during the tenure of the Obama administration where there was a positive NFP number, is when the census fudge factor added hundreds of thousand of (potentially double-counted) positions, which have now been unwound. And obviously each month that does not create a net positive add to the economy, means more and more jobs have to be back-end loaded. In a few months, the economy will need to be adding 300k a month to get to the OMB projection, then 400k… then 500k…
And if we don’t get those jobs, then deficit predictions are out the window because fewer jobs means lower tax revenue and high expenditures on unemployed people. So, unless we’re about to go gangbusters on job creation, OMB’s prediction isn’t worth the paper its printed on.
My only guess here is that they are just hoping that something turns up. That some how, some way the economy will recover and thus allow Obama to get re-elected in 2012. Because if the numbers don’t come together, then by 2012 we’ll be at record high deficits and very high unemployment. Not exactly the change we can believe in.
Until reality sets in or an economic miracle occurs, we can just expect the Administration to keep churning out stupid information such as this. It is best ignored – unless you start seeing a consistent creation of 250,000 jobs starting this month, just bank on it that OMB is merely trying to pull the wool over our eyes.
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