Here are the latest CBO forecasts of the output gap and unemployment rate, as well as counterfactual gap and rate that would have taken place in the absence of the stimulus package.

Source: CBO, A Preliminary Analysis of the President's Budget and an Update of CBO's Budget and Economic Outlook, March 2009.

Source: CBO, A Preliminary Analysis of the President's Budget and an Update of CBO's Budget and Economic Outlook, March 2009.

Notice that the no-stimulus counterfactual output gap and unemployment rates are noticeably worse now than only a month ago (see this post). For 2010, the February counterfactual was -6.3% of GDP, now around -10%; the February counterfactual for 2010 was 8.7% unemployment, now it's nearly 11% (I'm eyeballing the current counterfactuals off of Figures 2-1 and 2-2). The January outlook is discussed here. My guess is that that "massive" stimulus is going to look a lot less "massive" given the severity and duration of this recession.

As a general rule, politicians will say anything that they think they can get away with which will advance their agenda. Truth is not usually a major consideration. That applies to politicians of both political parties.

In principle, the media places a limit on politicians' ability to lie, since calling your opponent a murderer is likely to backfire if the headline reads "Senator Fabricates Murder Story."

Unfortunately, budget reporters largely fall down on the job. Hence we get the headline "Obama's New Tack: Blaming Bush," with the subhead "Points to 'Inherited' Economy."

Okay, let's get serious folks. It is not a "inherited" economy, it is a inherited economy. There is no dispute that the economy was in horrible shape at the time that President Obama took office. Anyone who tries to say otherwise is simply lying.

Furthermore, the overwhelming majority of the budget deficit that the Republicans are now complaining about is directly attributable to President Bush's policies. The additional deficit for 2009 that it is attributable to President Obama's efforts to fix the disastrous economy that he was handed by President Bush is trivial in comparison, as can be clearly seen. (The projections are taken from CBO).

--Dean Baker

When Will There Be Good News? Does it Help There Already Was Some?

By William Easterly

In the midst of the general doom and gloom, fears about how the crisis will affect poor countries, and fierce criticism of markets, states, and aid agencies, perhaps it’s healthy to step back to the big picture, to recognize there has already been some very real good news. The graph below shows some overall statistics for the developing world:

This graph has a mixture of good news that all of the much-criticized triad of markets, states, and aid can take partial credit for. Markets obviously get at least some credit for the reduction in global poverty and increase of global average income. States supply public goods like education, water, and health, and there has been progress on all of these. Aid deserves some credit for successes in health, as already stressed in a previous blog post.