CBO pessimistic, finds need for stimulus

CBO PESSIMISTIC, FINDS NEED FOR STIMULUS…. A bleak forecast.

The nation’s current recession is likely to be the longest since World War II, and by some measures could be the worst since the Great Depression, a new Congressional Budget Office forecast said Tuesday.

Without a major economic stimulus plan, “the shortfall in the nation’s output relative to its potential would be the largest — in terms of both length and depth — since the Depression of the 1930s,” said new CBO Director Douglas Elmendorf in testimony prepared for the House Budget Committee.

The analysis is sure to add important momentum to the effort to enact an $825 billion stimulus by mid-February.

Well, one would certainly like to think so.

Elmendorf added that the stimulus proposal “would provide a substantial boost to economic activity over the next several years relative to what would occur without any legislation.”

There’s been quite a bit of interest lately in the CBO’s analysis of the stimulus package and the economy. What do you suppose the chances are that Republican lawmakers will be as enthusiastic about today’s CBO forecast as they were about a preliminary report based on a partial look at an out-of-date stimulus proposal?