Peter Orzag on the Economy Former Congressional Office of Management and Budget director Peter Orzag puts forth a bleaker economic outlook than that projected by official figures--including his own former office's official figures--in Bloomberg. The CBO's figures are "misleading," he says, and perhaps overly optimistic, partly because the CBO "assumes a recovery more robust than what other nations have experienced following financial crises." Historically, though, Orszag notes, financial implosions in other countries have led to years of elevated unemployment: "the peak was reached from three to 10 years after the meltdown," and the countries still haven't regained "pre-crisis" employment levels. Orzag asks a budget expert to recalculate the projected budget deficit if economic growth is more sluggish than officials project and finds that "the impact from sluggish growth on the budget shortfall over the same period exceeds $2.5 trillion--which is more than the roughly $2 trillion in deficit reduction that may wind up being agreed to as part of a deal to lift the debt ceiling." He continues that "this is only more evidence that the right policy response is a combination of more aggressive action to bolster the job market now and much more deficit reduction enacted now to take effect in a few years."
Ahmed Rashid on the Political Vacuum After Ahmed Wali Karzai American officers in Afghanistan may have disliked Ahmed Wali Karzai, but his murder yesterday could cause them problems, Ahmed Rashid writes in The New York Times. Rashid notes Karzai's complex and sometimes unsavory career as a ruthless power broker in the south of Afghanistan, an accused drug smuggler, and a racketeer. "However much Ahmed Wali Karzai was loved or loathed," Rashid cautions, "his death leaves a huge political vacuum for the Americans and President Karzai at a critical moment for three efforts--the war against the Taliban, the start of the drawing down of American forces, and American efforts to talk to the Taliban and forge a peace agreement." Rashid recounts Karzai's role as a "practical operator" for his half brother during the years of exile in Pakistan, and his quick rise to power in the south in the years after 2001. With the sudden absence of this long-time power broker, Rashid says, "uncertainty has once again returned to the south."