The Horror of the CBO's 2010 Economic Report

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The president's plan to freeze non-military discretionary spending isn't good. The new projections for this year's economy from the CBO are much worse. They project a $1.3 trillion deficit for fiscal year 2010, the second largest as a share of GDP since WWII. They project unemployment over 10 percent until mid-year, and still in the high 9s when the spending freeze bites.

In short, we're trapped.


Unemployment is so high that it's costing us billions in government revenues, but the instinct to rein in spending could potentially cost even more. Obama wants to demonstrate -- to voters, to moderate Republicans, to international investors -- that he's serious about tackling the deficit. Ironically, the way he's chosen to do that is by freezing all spending except the parts that impact security and entitlements. But the main drivers of our deficit are, well, military spending and entitlements. He's demonstrating his dragon-slaying potential by fighting a dragonfly.

A spokesman for House Minority Leader John Boehner likened the freeze to "announcing you're going on a diet after winning a pie-eating contest." Well, that doesn't make a lot of sense. If you're a fat person who's just won a pie-eating contest, you should start dieting eventually! No, this freeze is more like a pie-eating champion announcing that his weight-loss plan is to stop drinking cafe lattes. The gesture is only marginally related to his weight gain (he's a pie-eating champ, after all), and it might even backfire by making him more sluggish.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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