On Friday, the Obama administration released its annual mid-session budget review, which contains its short-term and long-term predictions for economic growth. The media has focused most of its attention on the White House's deficit projections -- $1.4 trillion deficits for 2010 and 2011 -- but on the whole, deficits are the least worrisome thing about the report. After all, the current deficit owes most of its size to the recession, TARP, and the Bush tax cuts. Assuming the economy grows at a healthy clip for the next few years -- as the administration does -- the deficit is expected to drop to 3.9 percent of GDP by 2015.
By contrast, the administration's projections for unemployment are genuinely worrisome. For 2011, the administration expects unemployment to remain high at 9 percent and drop to 8.1 percent in 2012. From there, the White House expects 7.1 percent unemployment in 2013, 6.3 percent unemployment in 2014, and 5.7 percent unemployment in 2015. The administration doesn't see unemployment declining to pre-recession levels until 2016, nearly a decade after the recession began. What's more, there's little indication of a decline in the number of long-term unemployed, which is at an unprecedented high with nearly 6.7 million people out of work for more than six months.
Alone, the massive social and economic costs of long-term unemployment should be enough to make this a top -- if not the top -- priority for the administration. Beyond that, if anything should push the White House to find a way to deal with this, it's the fact that unemployment will be intolerably high during a presidential election year. Of the three postwar presidents who ran for second terms, the only three not re-elected -- Gerald Ford, Jimmy Carter, and George H.W. Bush -- saw unemployment climb to relative highs in the final year of their presidency. The unemployment rate was 7.8 percent in 1976 (when Carter defeated Ford); 7.5 percent in 1980 (when Reagan defeated Carter); and 7.4 percent in 1992 (when Clinton defeated Bush). The only postwar president to win reelection with unemployment above 6 percent was Ronald Reagan in 1984, when unemployment was perched at 7.2 percent.
Walter Mondale was a uniquely terrible candidate, but if unemployment were at 8.1 percent -- the projection for 2012 -- even he would have had a chance at unseating Ronald Reagan. Obama is a confident guy and an excellent politician, but with these high projections for unemployment, he is definitely flirting with an unsuccessful re-election bid and potentially failed presidency.
-- Jamelle Bouie