Stimulus Bashing And The Secret CBO Report

[4dsc]

The Congressional Budget Office (CBO) is supposed to be a non-partisan organization providing neutral analysis on budget and economic issues to members of Congress and the general public. CBO has generally adhered to the principle of careful neutrality regardless of the political affiliation of its director.

In a seeming departure from its history, CBO has apparently selectively made available a report that finds that much of the impact of the stimulus will not be felt until after the end of the 2010 fiscal year. While it is not clear that the contents of the report are very damning to the package being debated in Congress, the CBO report is being presented as a serious setback to President Obama's effort by some in the media and the Republican Congressional leadership.

The parts of the report discussed in the media should not actually raise much concern.

First, it is important to remember that fiscal year 2010 ends on October 1, 2010. The Congressional Budget Office projects a year-round average unemployment rate of 9.0 percent for 2010, with unemployment rising at the beginning of the year and falling at the end. This projection implies that CBO expects the baseline unemployment rate to be around 9.0 percent in October of 2010, at the end of the fiscal year, nearly two percentage points above the current level. If the CBO baseline projection is accurate, then we should be glad that the stimulus package will sustain spending into the 2011 fiscal year. The economy will still badly need it.

http://tpmcafe.talkingpointsmemo.com/2009/01/23/stimulus_bashing_and_the_secret_cbo_report/

[xchrom]

1. only 18% of this stimulus goes to infratructure spending --

so it's not a surprise that as the bill stands now the impact wouldn't be felt for a long time.