Based on testimony from the head of the Congressional Budget Office (CBO), government experts can't figure out where the economy is going. That means that predicting the federal deficit, the amount of debt the Treasury will have to raise and the future burden on taxpayers is merely guessing.
Testimony of Douglas Elmendorf, Director of the CBO, before the Committee for the Budget of the U.S. House of Representatives shows that the budget office has a very wide spread of guesses about GDP this year and next. For 2009, the optimistic figure is a contraction of 2.3 percent and the most pessimistic is a 3.3 percent contraction. The divergence gets even wider for 2010 with a spread of 1 percent growth to 2.8 percent growth. In a $14 trillion economy, a percentage point makes a big difference.
The CBO predictions of unemployment are equally imprecise.
If the worst forecasts from the agency turn out to be true, the concerns that the credit ratings agencies have voiced about sovereign debt could move to U.S. Treasuries. America can't borrow its way out of trouble year after year.
Douglas A. McIntyre is an editor at 24/7 Wall St.