Some amazing predictions from the CBO

Who knows about predicting the economy a year from now, but the CBO has some depressing predictions.

Key facts from the CBO’s Budget and Economic Outlook:

Real economic growth is projected to be to 2.2 percent in 2012, falling to 1.0 percent in 2013;

The unemployment rate is expected to reach 8.8 percent in 2012, 9.1 percent in 2013, and 8.7 percent in 2014;

The FY2012 budget deficit is projected to equal $1.079 trillion, the fourth consecutive year with the budget deficit above $1 trillion;

Total debt is projected to reach $16 trillion in 2012, with debt held by the public to eclipse the $11 trillion mark in 2012 (72.5% of GDP);

Debt held by the public is projected to reach $15.3 trillion by 2022. . . .

How about this discussion of the report:

The unemployment rate would be even higher than it is now had participation in the labor force not declined as much as it has over the past few years. The rate of participation in the labor force fell from 66 percent in 2007 to an average of
64 percent in the second half of 2011, an unusually large decline over so short a time. About a third of that decline reflects factors other than the downturn, such as the aging of the baby-boom generation. But even with those factors removed, the estimated decline in that rate during the past four years is larger than has been typical of past downturns, even after accounting for the greater severity of this downturn. Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 11⁄4 percentage points higher than the actual rate of 8.7 percent. . . .

Meanwhile, it looks as if most Americans think that Obama is passing up some jobs with his dragging his feet over the Keystone pipeline. It is interesting to see when the Obama administration is willing to use multipliers in its predictions and when it claims that we need a short term stimulus versus a longer term one. They haven't exactly been consistent over time. From Politico:

Congressional Republicans and proponents of TransCanada's Keystone XL pipeline have successfully put the issue on the map, as 78 percent of Americans believe the pipeline would create a “significant amount of jobs,” according to a late December poll by GOP pollster David Winston.
TransCanada claims the pipeline would create 20,000 jobs - 13,000 in construction and 7,000 in manufacturing.
But the State Department — which was studying the proposal — said it would create " approximately 5,000 to 6,000 direct construction jobs" and downplayed any major long-term employment boost.
Further muddling the picture, TransCanada commissioned a Perryman Group study that predicted up to 119,000 spinoff jobs. . . .
Meanwhile, voters were divided over whether President Barack Obama was right in November when he attempted to punt a decision on the pipeline until 2013.
Forty-eight percent said they agreed more with the president and concerns about the environmental impact than with Republican claims the delay "is costing 20,000 jobs" and is due to political reasons. Forty-five percent sided with the GOP claim. Those figures are within the margin of error. . . .

"CBO feels crush of health care requests"

The CBO scoring process has been manipulated in part because the Republicans haven't been able to get the CBO to estimate what some key parts of the health care bill are going to do to total costs. Whether on purpose or by accident it doesn't really matter. What is the impact of banning different insurance premiums based on pre-existing conditions? I think that it will be huge, but CBO has refused to answer saying that they have been kept too busy by the Democrat majority.

President Obama's agenda has so overloaded Congress that its legislative gatekeepers - the analysts who score each bill and the auditors who weed out waste and fraud - can't keep up.

Repeated requests from lawmakers seeking to have their health care reform plans evaluated have overwhelmed the Congressional Budget Office, where some health analysts are putting in 100-hour workweeks. Meanwhile, the Government Accountability Office, Congress' chief investigative arm, says it needs an additional 144 staffers just to track waste and abuse from the $862 billion Recovery Act that was enacted last year.

"The almost-round-the-clock schedule maintained this past year by CBO's current staff cannot be maintained much longer," that agency's director, Douglas W. Elmendorf, testified Wednesday to a House Appropriations subcommittee as he made a pitch to add new staff to his stressed-out team. . . .

The bizarre CBO estimated deficit numbers for the Baucus bill

From the WSJ:

The nonpartisan Congressional Budget Office on Wednesday said that a health-care measure released by Senate Finance Chairman Max Baucus (D., Mont.) would reduce the deficit by $49 billion over 10 years.

In a letter to Baucus, the CBO states the bill would cost a total of $774 billion, but would be offset by revenue-raising provisions, such as a 35% excise tax on high-cost health insurance plans, as well as spending reductions. The result, it said, would be a $49 billion reduction of federal deficits from 2010 to 2019. . . . .

Here is one huge mistake that the estimates are making:

The Obama/Baucus plan doesn't force people to buy insurance; it requires them to pay a tax if they don't. But the tax is so low that the end result will be the same as not requiring people to buy insurance. The tax for those who don't buy insurance ranges from $750 for the poorest single people to as high as $3,800 a year for families. Even without unlimited insurance benefits, the average insurance cost today is much higher: in 2008, it was on average $4,704 for individuals and $12,682 for families. But with no penalty for having a pre-existing condition, people will pay the tax and wait to buy insurance once they get sick. If people only buy insurance once they are already sick, insurance premiums will soar dramatically. In short order there will be much higher insurance premiums. . . .