Barack Obama has no intention of trying to balance the budget anytime soon. Here is what he will try to do (and this is straight from Team Obama): "Obama's plan pays for all proposals and cuts the deficit from its 2008 level and relative to what would happen if current policies were continued. He would like to balance the budget but with the tremendous economic and global uncertainty cannot make a specific promise about when that will happen."

In other words, 1) Obama's projections assume the Bush tax cuts don't expire even though they do at the end of 2010; 2) Obama isn't going to pull a Clinton and sacrifice his "investment agenda" to please budget hawks and the bond market. (And let me add a third point: I think Obama believes getting entitlements under control is more important than annual budget deficits. Just a guess.)

My guy Mike "Hate the economy, love the stock market" Darda, chief economist at MKM Partners, gives yet another sobering analysis (boldface mine) of the state of the world's largest and most productive economy:

1) Despite a multipronged monetary and fiscal effort to stop the hemorrhaging in housing and break the crisis of confidence in credit, the situation remains shaky.

2) Credit markets have not participated in the recent rally the financials have enjoyed—a red flag in our view. Mortgage spreads, swap spreads and lending standards are two standard deviations or more above historical norms. This will serve as a stiff headwind until or unless it reverses.

The great Arnold Kling provides some insight into the megagigantic housing bill, the bad boy that the New York Times describes as "a landmark shift in the government's role in the housing market, extending a helping hand to both Wall Street and Main Street...[ranking] in importance with the creation of the Home Owners' Loan Corporation to prevent foreclosures in the 1930s as part of the New Deal, and legislation in 1989 responding to the savings and loan crisis."

Mr. Kling:

Basically, the housing bill rewards everyone who participated in the excesses of the housing market and punishes the rest of us. Lately, I've been reading a lot about Switzerland. There, just about any legislation is subject to veto by a popular referendum. This is an instance in which I wish we had a referendum in this country. I doubt that this housing bill would win more than 20 percent of the vote.

Just as I was getting my noodle around the idea—suggested by some economists and Wall Street guys—that the government should flat out buy $500 billion in mortgage-backed securities from banks to end the credit crisis, economist Nouriel Roubini goes and ups the ante.

Roubini, the Official Doomsayer of the 21st-Century Housing Crisis, thinks Uncle Sam is going to de facto nationalize U.S. housing via a $1 trillion housing-mortgage bailout. That would be in addition to, I would guess, a complete takeover of Fannie Mae and Freddie Mac. (If he's right, the government had better be careful, or there won't be enough dough left over to bail out GM and Ford, as well as pay for Al Gore's $5 trillion energy plan.)

This from Macroeconomic Advisers, the well-known economic consulting firm, using the forecasting model of Yale University political scientist Ray Fair:

The Macroeconomic Advisers, LLC (MA) Presidential election model predicts that Democratic presidential candidate Senator Barack Obama will win 54.8 percent of the two-party popular vote and Republican presidential candidate Senator John McCain will receive 45.2 percent in the November election, given economic conditions expected through the fall.... The Presidential election model relies upon four political factors—candidate of the incumbent party, approval rating of the incumbent candidate (if running), party, and incumbent party's term in office—and three economic factors—real income growth, the unemployment rate, and the change in energy prices. Together, these seven factors predict the share of the two-party popular vote garnered by the incumbent party. This model has correctly predicted the winning party 12 out of 14 times in our sample, and predicted the popular vote better than the original model developed by Ray Fair.... According to this model, an expected 47% increase in the price of oil (WTI) in the three quarters leading up to the election would reduce Senator McCain's vote tally by 2.9 percentage points, while weak real disposable personal income growth over the same period would reduce it by 3.3 percentage points.

I just got back from a think-tank debate on taxes between McCain economic adviser Douglas Holtz-Eakin and Obama economic adviser Austan Goolsbee. (I would say Goolsbee won if for no reason other than he came armed with an effective PowerPoint presentation while Holtz-Eakin decided to kick it old school. He just talked.) Here are a few observations and notes:

1) Goolsbee said McCainomics "not just repeats the [Bush economic mistakes] but magnifies them. [John] McCain's tax cuts are twice as big and twice as regressive."

When Bill Clinton became president in 1993, he famously dumped his "Putting People First" investment agenda in favor of deficit reduction in hopes of lowering interest rates. Might a President Barack Obama do the same? (This is the secret fear of many left-of-center folks on my speed dial.)

Although Obama has ambitious—and pricey—clean energy and infrastructure spending plans, he will also probably be facing a $500 billion-plus budget deficit, more than double what government economists were predicting when Obama announced his candidacy in early 2007. I asked my pal Jared Bernstein—a Friend of the Blog, informal Obama economic adviser, and author of the must-read Crunch: Why Do I Feel So Squeezed?—what he thought Obama would do. Bernstein made a few points to me, speaking purely for himself:

I am currently in the middle of reading the fabulous Grand New Party: How Republicans Can Win the Working Class and Save the American Dream by Ross Douthat and Reihan Salam. It's chock full of interesting economic ideas that Republicans can use to better appeal to working-class voters and families. Among them: massively expanding the tax credit for children, a "GI bill" of tuition tax credits for stay-at-home parents who want to get back into the workforce, and government investment in a better telecommunications infrastructure to boost telecommuting.

Although an interview with Douthat is in the works, I wanted to get his quick take on McCainomics. Here is what Douthat wrote me:

I'm pretty down on the McCain economic agenda, frankly—my sense is that they assume, rightly, that they'll be dealing with large Democratic majorities, which means that nothing they propose will actually have any chance of coming to fruition ... so they've decided to avoid making any tough choices, and instead are promising a grab-bag of ideas that don't add up: They're claiming they're going to cut corporate taxes and cut taxes for families and preserve the Bush tax cuts and balance the budget and pay for people who can't get insurance under his healthcare plan and maybe have a program of wage insurance and institute a cap-and-trade regime and so on and so forth. (I tried to write about this here, when McCain gave his first big speech on the economy: http://thecurrent.theatlantic.com/archives/2008/04/mccainomics.php) So while there are things in his agenda, like doubling the dependent tax credit, that I think are good ideas for Republicans, and in broad outline I like his healthcare plan ... they don't seem to have any interest in making it all add up, and he clearly has no appetite for getting into the weeds on domestic policy at all.

Given that we are supposed to be in the worst housing and financial crisis since the Great Depression, it is certainly curious—at least to the media, left-of-center economists, and Wall Street permabears—that like, you know, the economy is sorta-kinda OK. (My pal Bob Stein, economist over at First Trust Advisers, thinks real GDP grew at 3 percent in the second quarter.)

Here's puzzled economist and blogger Brad DeLong:

I still do not understand why the real side of the economy is doing so well in relative terms. The worst financial distress since the Great Depression ought to trigger the worst downturn in demand, production, and employment since the Great Depression. It hasn't—at least not so far.

Russell Roberts, George Mason University econ professor and blogger over at Café Hayek, E-mails me to tell me that my $5 trillion estimate of the cost of Al Gore's 10-year, zero-carbon-emission energy plan could be a bit low.

If 20% of something costs $1 trillion, how much would 40% cost? If it's two trillion, that's linear, and so on so the whole thing would cost $5 trillion. But replacing the first 20% of US energy with wind, solar and a bunch of people pedalling isn't going to be the same as replacing the second 20%. My presumption is that the second fifth is harder than the first fifth. For example, if you replace 20%, you might use solar in the sunniest parts of the country. But what about the non-sunny parts that aren't windy? Those are going to cost more.

In a speech yesterday here in Washington, Al Gore challenged the United States to "produce every kilowatt of electricity through wind, sun, and other Earth-friendly energy sources within 10 years. This goal is achievable, affordable, and transformative." (Well, the goal is at least one of those things.) Gore compared the zero-carbon effort to the Apollo program. And the comparison would be economically apt if, rather than putting a man on the moon—which costs about $100 billion in today's dollars—President Kennedy's goal had been to build a massive lunar colony, complete with a casino where the Rat Pack could perform.

Gore's fantastic—in the truest sense of the word—proposal is almost unfathomably pricey and makes sense only if you think that not doing so almost immediately would result in an uninhabitable planet. Texas oilman T. Boone Pickens recently came out with a plan to generate 20 percent of America's power through wind. His estimate was that it would cost $1 trillion to build that capacity and another $200 billion to update our electrical grid to transmit that energy around the country. (And what would be the environmental impact of all those windmills dotting the countryside? Or solar panels covering our pristine deserts?)

"Necessary but not sufficient." That's the verdict of a story in today's Wall Street Journal that examines whether a college degree is still the ticket to a better life. The supposed killer stat is this one:

In the economic expansion that began in 2001 and now appears to be ending, the inflation-adjusted wages of the majority of U.S. workers didn't grow, even among those who went to college. The government's statistical snapshots show the typical weekly salary of a worker with a bachelor's degree, adjusted for inflation, didn't rise last year from 2006 and was 1.7% below the 2001 level.

My guy John Tamny over at RealClearMarkets, a Friend of the Blog, provides a reality check on the sudden public enthusiasm for oil drilling:

Record oil prices have created a growing consensus that we should open up off-limits areas in the U.S. for drilling. Nothing against drilling, but even if the discoveries are massive they won't in any way shield Americans from monetary mistakes that make oil expensive. More importantly, comparative advantage is being forgotten. The reality is that even in the best of times, the oil business is a bad one. With there being no such thing as foreign oil in the economic sense (even if all oil came from Iran, we would still buy it as though it were sourced in the U.S.), we in a perfect world would import 100% of our petroleum so that our limited human capital could pursue higher-value work.

I would very much like for this to be true:

We've developed a telecommuting model which shows that if the 40% of U.S. workers that studies show could work from home actually did, the U.S. could reduce Gulf Oil imports by 74%, and reduce gas consumption by 11.5 billion gallons a year. That would save consumers $52 billion and reduce greenhouse gases by 101 million tons. If those 40% worked from home half the time—roughly the national average for existing teleworkers—the savings would be $40 billion and 78 million tons of CO₂.

NBC's Today Show featured a segment this morning in which it brought in three economic experts—investment strategist Liz Ann Sonders of Charles Schwab, Steve Forbes, and CNBC's Jim Cramer—to give ideas about how to boost the economy. The threesome was set up with an easel and a big pad of paper so they could write their suggestions down. Then Matt Lauer interviewed each in turn.

1) Sonders had no real policy proposals. She said she wants to see a stronger dollar and thinks a recession would bring down inflation and purge excesses from the financial system. Overall, she urged America to be patient while saving more and spending less.