Economists Question Budget’s Economic Assumptions

By MARTIN CRUTSINGER | AP Economics

WASHINGTON – The administration insists it isn’t so, but some private economists are wondering if the Obama administration has brought “Rosy Scenario” back to town.

In unveiling his budget, President Barack Obama pledged to bring “honesty and fairness” back to the budget process by getting rid of the gimmicks past administrations had used to hide the real costs of government programs and proposed tax cuts.

But many economists who examined the economic assumptions that undergird the spending plan believe that Obama may have resorted to one of the oldest gimmicks around — relying on overly optimistic economic assumptions to make it look like you are dealing with soaring budget deficits when in reality you are only closing the gap on paper.

“They used to joke during the Reagan years that the highest-ranking woman in the administration was Rosy Scenario,” said Nariman Behravesh, the chief economist at IHS Global Insight, a major private forecasting firm.

Rosy may be back in town, said Behravesh, who called the Obama administration’s forecasts “way too optimistic.”

For its part, the administration insisted that it hadn’t cooked the books to show greater growth, and thus more tax revenues, in coming years. But the administration forecast is far higher than the projections for growth in the overall economy, as measured by the gross domestic product, of many private analysts …

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