Robert Samuelson's column lays out the factors that caused the huge surplus predicted for the last decade by the Congressional Budget Office to turn into a huge deficit. Samuelson cites analysis of the $12 trillion shift from the Congressional Budget Office (CBO) and two "non-partisan" groups, the Committee for a Responsible Federal Budget and the Pew Fiscal Initiative.

Samuelson and these groups are careful to say that blame for this shift is widely shared, but that the largest chunk stems from weaker than projected economic growth and changes in technical assumptions. If we look more closely at the weaker than expected economic growth and some of those technical assumptions, the picture gets a bit more interesting.

The economy grew much more slowly than expected in 2001 and 2002 because of the collapse of a stock bubble. It grew much less rapidly than expected in 2008 and 2009 because of a collapse of the housing bubble. Some of the "technical changes" were the result of much lower capital gains income than had been projected. That is what happens when a bubble bursts. (The official data probably understates the falloff, since it is likely that much capital gains income shows up as normal income.)

In short, the main reason that the CBO projections understated the deficits over the last decade was that it twice failed to recognize asset bubbles. In fact, the impact of this failure on projections is even larger since some items on the Samuelson deficit list would not have been there absent the slower growth, like the Obama stimulus.

So there is a clear villain in this story, economic analysts who were too incompetent to recognize two huge bubbles and the impact that their collapse would have on the economy. Unfortunately, in Washington policy circles, such failures are a badge of honor ("who could have known?" is the official motto in these parts), so these folks continue to hold their jobs and get regular promotions and increased authority.

While we might prefer to see people with better knowledge of the economy in positions of responsibility, there is a bright side. These jobs keep people without marketable skills employed.

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