Archive for the 'Statistics' Category

U.S. Raises Estimate for 10-Year Deficit to $9 Trillion

August 25, 2009

EDMUND L. ANDREWS | The New York Times | August 25, 2009

WASHINGTON — The Obama administration, citing an economic downturn that has been deeper than it had first thought, raised its estimate on Tuesday of the government’s deficit over the next decade to $9 trillion from $7.1 trillion.

Despite the shortfalls, White House officials said they saw no reason to back away from President Obama’s ambitious and costly goal of overhauling the health care system. The new amount includes the cost of the health care overhaul as well as about $600 billion in additional revenue that the administration hopes to raise, two initiatives Congress has yet to approve.

“A lot of people will look at this deficit and say we cannot afford health care reform,” said Peter R. Orszag, director of the Office of Management and Budget. But Mr. Orszag said the opposite was true: the only way to control spiraling Medicare costs, he said, was to get control of overall health care costs by overhauling the system

“The size of the fiscal gap is precisely why we must enact fiscally well designed health care reform now,” he said.

Republicans are certain to attack that argument. Indeed, they are already doing so.

White House officials predicted that the budget deficit this year will peak at $1.58 trillion, though they said the 2009 shortfall will be about $261 billion lower than they had predicted in May. The main reason is that officials have decided that they will not need another round of bailout money for the nation’s banks. The Congressional Budget Official also estimated a deficit this year of about $1.6 trillion.

In the earlier budget forecast, administration officials had created a “placeholder” of $250 billion to cover possible costs of a additional bank bailouts. They also assumed higher costs for the Federal Deposit Insurance Corporation’s expansion of deposit insurance and debt guarantees.

Even so, the administration is projecting that annual deficits will remain above $1 trillion through 2011 and will be bigger than any since World War II, even when measured conservatively as a share of the nation’s economic output.

The government’s total debt would roughly triple by 2019 to $17.5 trillion under the new estimate, almost $2 trillion more than the White House estimated in May. Measured as a share of the nation’s economic output, public debt would hit 76.5 percent of gross domestic product by 2019 — by far the highest percentage in the past half-century — from about 56 percent this fiscal year. This year will be the first time the number has exceeded 50 percent since World War II. The previous estimate was about 67 percent.

The biggest reason for the additional red ink is the administration’s recognition that the recession has been deeper and unemployment has been much higher than White House forecasters assumed in their first budget estimate in May.

The added depth of the downturn is expected to increase payouts for unemployment benefits and other safety-net programs, while reducing tax receipts more than originally expected.

The administration had originally assumed that the economy would shrink 1.2 percent and that unemployment would average about 8.1 percent this year. Instead, the economy is expected to shrink almost 2 percent while unemployment is expected to average 9.3 percent in 2009 and 9.8 percent in 2010.

For the first time, administration officials officially predicted on Tuesday that unemployment would climb above 10 percent by early next year, from 9.4 percent in July.

The costs of the additional unemployment and the slower growth extend beyond the next year or two, not just because the economy will take longer to return to normal but also because the government’s interest expense will be compounding more rapidly.

Mr. Orszag estimated that, by 2019, interest expenses will account for more than 80 percent of the projected deficit of $917 billion.

Without offering any details, the White House budget director said that President Obama will soon unveil plans to reduce long-term deficits tied to soaring costs of Medicare, Social Security and other entitlement programs.

Copyright 2009 The New York Times Company


247,000 more unemployed in July is positive news?

August 7, 2009

Eric Brooks | August 7, 2009 | Special to this blog

In an article today, Reuters reports “Payrolls fall less in July, jobless rates eases”.  The article goes on to say

U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August, according to data on Friday that provided the clearest evidence yet that the economy was turning around.

With fewer workers being laid off, the unemployment rate eased to 9.4 percent in July from 9.5 percent the prior month, Labor Department data showed, the first time the jobless rate had fallen since April 2008.

This is a good example of news spin at its worst.  Over a quarter million more unemployed were added to the already devastating number of us struggling to keep food on the table and a roof over our heads. As usual, the people who are under- or un-employed are not mentioned, only the “positive news. This is the best showing (since) prior to the financial meltdown….”

The unemployment figures are very deceptive, for example leaving out the long term unemployed who have supposedly “given up” looking for work as well as the new entrants into the job market.The article mentions that “…in July the workforce fell by 422,000, far more than the 155,000 decline in June, suggesting jobless workers may have given up looking for new work.”  That is, almost a half-million folks disappeared off the rolls of the unemployed in a statistical vanishing act worthy of double-talking policy wonks but not of caring and sane policy makers who want to address the social problem of under- and un-employment.

No matter how you look at it, there remain over 30 million unemployed in the United States, and countless under-employed, who need jobs or income now.  In the crowing about this “positive news” the struggling unemployed are forgotten. The need for unity among the under- and un-employed to put our needs before the nation remains. We must refuse to be “disappeared” through statistical magic tricks; our voices matter.

We can demand our needs be met; we can demand jobs or income now.