CBO head: Stimulate economy now, cut deficit later when economy back to normal

An interesting point buried in the CBO director's quote is that you shouldn't implement long-term cuts until the economy is nearly back to its full potential. No one thinks the economy is going to be nearly back to its full potential in a little over a year when all the Obama/GOP debt ceiling aftermath cuts go into effect. From the Washington Post:

“Credible policy changes that would substantially reduce deficits late in the coming decade and over the long term, without immediate cuts in spending or increases in taxes, would support the economic expansion in the next few years and strengthen the economy over the longer term,” Elmendorf said at the hearing. “There is no inherent contradiction between using fiscal policy to support the economy today, while the unemployment rate is high ... and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential.”

But the problem we have is that the President already endorsed immediate cuts to the budget.

But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.

So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. (Applause.) Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President.

No, the public deserves a government that understands basic economics enough to know that you don't cut spending when the current economic forecast is malaise for years and years to come.  This is a problem of the President's own doing.  He wanted to embrace the Republicans and their ideology, again, in order to make himself look like a centrist to the public, even if it meant telling the public something that was flat our wrong.  And now he, and we, are locked into a political climate that is going to worsen the economy and possibly lose us the presidency and the Senate.