The White House’s mid-session review of the budget and the economy was a bracing acknowledgement of reality, with GDP growth and employment estimates plunging. But it still included the fantasy of sharply higher growth shortly down the road.

The 2011 growth forecast was cut by a full point.

As a result, it offered an alternative economic forecast based on what has happened in recent weeks. This projects GDP growth this year of 1.7 percent, compared with 2.7 percent expected back in February, with 2.6 percent forecast for 2012, down from a 3.6 percent prediction in February.

However, the more subdued growth outlook did not have a major impact on the expected deficits, and growth was expected to rebound to above 4 percent by 2015.

I’m not sure where the rebound comes from, but economists have been predicting rosy pastures just out of reach for a while now. It’s not really based on anything material.

Unemployment is even worse. The White House now projects unemployment to average 9.1% in 2011 (which is where it happens to be right now) and 9.0% for 2012, an election year. So essentially, they’re saying there will be no movement on jobs this year or next.

Those projections are made under current law, and so they don’t include potential programs to boost the economy, which are clearly hinted at in the document.

“The economic projections make clear there is a real need in the short term to kick start economic growth and get on a sustained higher growth path,” White House budget chief Jack Lew told reporters on a conference call.

In a midyear review of its annual budget, the White House offered some hints of what Obama will say next week. It said the speech could include proposals for a mixture of tax cuts aimed at middle class families, infrastructure spending and aid for the long-term unemployed.

The unemployment rate, under this scenario, would not hit 6% until 2016, unless something is done to improve growth. That means almost a decade of demand shortfalls. You already see this with recent college grads taking dead-end jobs and waiting to have actual careers. You see it with 55 year-olds laid off and expecting never to work again, without the savings for retirement. This is a massive waste of human resources and human potential. It’s a crisis. And it’s not going to end for a long time, unless something is done.

…I forgot the good news: the deficit is projected to be only $1.3 trillion, down from $1.6 trillion, thanks to various changes from appropriations and debt limit deals. Aren’t you excited now?