Today the White House Office of Management and Budget (OMB) released the mid-session review to the House of Representatives. The latest update to the Administration’s economic forecast, last done in February, and its budget projections going out until 2019 shows a somewhat smaller federal 2009 deficit, but much larger subsequent deficits than previously projected.
It also shows two more years of 10% unemployment rates, and a -2.8% drop in the nation’s economy this year instead of the previously forecast growth.
Executive summary devoid of spin: the economy is in bad shape with no immediate relief in sight. This is bad news for the nation’s shrinking middle class, for the automobile business and our whole consumer-spending based economy.
“Overall, it underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path,” said Peter R. Orszag, Director of the OMB.
The report is certain to be attacked by the Republican party whose popularity along with the Democrats continues to decrease as economic woes continue and jobs are being lost.
The Obama Administration now predicts that taxpayer expenses for financial system bailouts will be less than anticipated. In addition, an open item for a possible further financial stabilization program has been removed. The cost of the FDIC bank rescues have also been lowered.
The bottom — red-ink — line is a slight $262 billion improvement in the 2009 deficit, now projected to be whopping $1.58 trillion – or 11.2% of Gross Domestic Product – down from a previously projected $1.84 trillion or 12.9% of GDP.