Doug Henwood on the CBO's weird projections.

How do they come up with these numbers? I asked the CBO for clarification, but they haven’t responded. But asking around yields something like this. Over the long term, economic growth is a function of labor force growth and the productivity of that labor -- how much workers can produce in an hour or year of work. The CBO apparently assumes that the labor force will grow very slowly -- around 0.3 - 0.4% a year. That’s less than half the current rate, and about half the rate that the Census Bureau projects the population will grow in the coming decades. If that’s true, the share of the adult population working will shrink to levels we haven’t seen since, well maybe forever, and certainly in modern times. At the same time, they’re assuming record-low growth in productivity, probably around 1.5%, which is something like a third below the long-term average, and well below the rate clocked in the much maligned 1970s.

These assumptions are very similar to those underlying projections that the Social Security system will go broke. But if the economy grows at something closer to its long-term average, then that won’t happen. And the massive growth in debt won’t happen either, because the government will collect more in taxes than it would if we were locked in a semipermanent slump.

So what’s going on here? Is the CBO pushing these strange projections to promote an austerity agenda - cutting social spending and privatizing Social Security? Or are they really serious that a seventy-year near-depression awaits us? Inquiring minds want to know.