Obama Adviser: Deficit Likely Worse Than Planned (Laura Tyson)

The U.S. government's budget deficit will likely be wider than expected this year, a top White House adviser said Tuesday.

Speaking at the Nomura Asia Equity Forum in Singapore, Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said the U.S. economy faces a worse situation than previously believed, and the deficit - already the widest since World War II - may surpass a previous projection of around 12% of gross domestic product.

Tyson said her remarks represent her own views and not the administration's official position.

As to the size of this additional stimulus, she said it's too early to quantify, and "we'll have a much better idea towards the end of the year."

She added that the current stimulus package should create or sustain 3.5 million jobs, as planned, but its effect on unemployment will be less than previously expected because the crisis has had a greater impact on unemployment than anticipated.

One way for the U.S. government to reduce its debt and eliminate the budget deficit would be to increase government revenue as a portion of gross domestic product to a level comparable with that of Canada, she said.

She cited a recent report by the Organization for Economic Cooperation and Development showing that among OECD countries, U.S. government revenue as a percentage of GDP is higher than only that of Slovakia.

"If the government could get a way to get to Canada's intake, the debt and deficit problem would go away," she said. "In five years, we would go from deficit to surplus."

Tyson also said deflation remains a risk for the U.S. economy that "cannot be written off yet." She warned against attempts to fuel a recovery based on the housing sector.

Good grief, Laura D’Andrea Tyson; another Clinton retread!

Yep. And she was then the best spokesperson (not policy maker) for the failed Clinton economic policies. Apparently, nobody can lie better with a straight face for current administration, either.

Obama Adviser Says U.S. Should Mull Second Stimulus - BL, July 07, 2009

The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an outside adviser to President Barack Obama.
The current plan “will have a positive effect, but the real economy is a sicker patient,” Tyson said in a speech in Singapore today. The package will have a more pronounced impact in the third and fourth quarters, she added, stressing that she was speaking for herself and not the administration.
Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect. The government is facing criticism that the first package was rolled out too slowly and failed to stop unemployment from soaring to the highest in almost 26 years.

Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year. When Obama signed the first stimulus bill in February, his chief economic advisers forecast it would help hold the rate below 8 percent. .....

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