Obama’s budget shows he’s no Keynesian
Once again Obama, the great compromiser, has caved in to GOP demands and shifted his full attention to the budget deficit. His latest budget includes the sharpest tightening of fiscal policy that the country has seen in over 40 years.
According to his own estimates, these policies will have a drag on the economy equal to 3.1% of GDP in 2013. Yet, he is still predicting GDP growth of 3% for 2013 - quite the optimist! The CBO, on the other hand, predicts 1% growth and a possible recession next year.
"For 2013, the CBO projects growth of just 1% (as opposed to 3% in the White House budget), largely because of austerity measures. According to the CBO, growth could be as high as 4.1% next year if the government delayed its plans to reduce the deficits."