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Home Publications Blogs Beat the Press The Post Invents Projections of Economic Crisis

The Post Invents Projections of Economic Crisis

Tuesday, 27 April 2010 16:26

The Washington Post (a.k.a. Fox on 15th Street) told readers that: "Official forecasts suggest that without sharp changes in federal spending or tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country's ability to educate its children, care for the elderly or mount a robust national defense."

Wow, that sounds really dire. It would have been great if they gave a source for this one because that is not what the standard sources say. For example, if we go to our most recent Budget and Economic Outlook from the Congressional Budget Office (CBO), we find the economy growing at an average annual rate of 2.4 percent over the years 2015-2020. CBO also projects average productivity growth for this period at 1.8 percent a year, meaning in principle that living standards can rise at roughly that rate. It also projects an average interest rate on 10-year Treasury bonds of 5.5 percent, this is only slightly higher than the low-point of the budget surplus years at the end of the Clinton administration.

In short, there is no evidence in these projections of the sort of crisis described in the Post article. It would be interesting to see the document(s) that provide the basis for the Post's assertion.

Comments (4)Add Comment
Living standards can go up while education, defense and elderly care are eroded
written by AndrewDover, April 27, 2010 7:42
The CBO source supports the Post unfortunately, because the CBO made the assumption that there would be a sharp change in tax collections, specifically:

"CBO’s current-law forecast reflects the assumption that the tax cuts enacted in 2001 and 2003 will expire as scheduled at the end of 2010 and that the exemption amounts for the alternative minimum tax will fall back this year to the amounts they would have been in the absence of the regular "patches" (temporary adjustments)"

Also, even with those assumptions, the CBO projects net interest to grow from $187 billion in 2009 to $723 billion in 2020 which will erode something.
written by izzatzo, April 27, 2010 8:39
It's deranged at best, to report bean counter calls,
With no reference at all, to what caused the fall,
And who gets attention, the ones who dropped the ball,
Predicting gloom and doom, for the only cure to fix it,
The very ones who rigged it, and refused to try to nix it.
For any other issue, such as violent personal crime,
Their mugs would in headlines, their names dragged through the slime.
written by Bloix, April 27, 2010 10:09
"Downward spiral" - the same metaphor showed up in the Joel Aschenbach article in the Post last week. Looks like the Post now has talking points just like Fox.
written by bobbyp, April 28, 2010 9:28
"It would be interesting to see the document(s) that provide the basis for the Post's assertion."

The documents can be found at the Pete Peterson Foundation in their vault right next to the SSN Trust Fund Bonds. Remember when George Bush peeked in there?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.