This Week in the Economy: All Budget, All the Time

The President and Senate Democrats are calling it from the same playbook. Today leadership released their plan to "Win the Future" by, you guessed it, "Out-Innovating, Out-Educating, and Out-Building" and out-deficit reducing, as they signed on to the President's five year freeze on domestic discretionary spending.

The Federal Reserve now projects economic growth in 2011 to reach 3.4 to 3.9 percent. That's a nicely upgraded forecast from the previous range of 3.0 to 3.6. The employment picture is less good - 8.8 to 9 percent projected unemployment.

Former Bush speechwriter David Frum explains the conservative budget conundrum as follows:

Today though it's more relevant to think of conservatism as an attempt to draw a line connecting four points:

1) No tax increase
2) No defense cuts
3) No Medicare cuts
4) Rapid move to a balanced budget.

Obviously it's impossible to meet all four of those commitments. It would be difficult enough to combine #4 with even two of the first three.

Much of the struggle within the conservative world can be understood as a quiet debate over which of those commitments to jettison.

Steven Pearlstein declares the beginning of the budget fight by imagining what would have happened if the President had proposed a 60 cent hike in the gas tax a year ago. (The increase came anyway, but just because of increased gas prices.)

Since its budget time, and people are out there complaining about deficits and debt, here's the Most Important Budget Graph in the World, courtesy of the CBO:

What's it say? If you want to control deficits and debt, you've got to tackle healthcare.

For more on the budget and the economy, join NDN and the New Policy Institute for two major events. On Friday, February 18, we will host a discussion with a group of budget experts and economists, and on Tuesday, February 22, we will host a converastion with National Economic Council Deputy Director Jason Furman. Details on both available here.