While the deficit for 2009 is now projected to be lower than previously expected — at $1.58 trillion — the long-term picture doesn't look as bright, according to the White House budget office.
The total deficit from 2010 to 2019 is estimated to be $9.05 trillion, about $2 trillion more than what was projected in February, when Obama released his first budget outline.
The deficit for 2009 is projected to be smaller than previously forecast because the government doesn't expect to make any more payments to stabilize banks. The deficit in later years is larger than forecast because of "changes in economic assumptions" since February.
With the Bernanke announcement sure to at least temporarily overshadow the deficit news, Burton was asked why the announcement was made today. "There's been a lot of speculation out there, and the president wanted to put it to rest," he said. That would put Obama back into "vacation mode," he said.
Many on Wall Street and in academic circles believe that Bernanke is the best choice to lead the country into a sustainable recovery and would be in the best position to figure out when and how to reel in the trillions of dollars pumped into the economy to battle the crisis.
"Wall Street can rest a little easier now," said Chris Rupkey, an economist at the Bank of Tokyo-Mitsubishi. "Having a new chairman come in at this late date would put the Fed-engineered solution to both the recovery and the exit strategy at risk."
Bernanke, appearing last week at an annual Fed conference in Jackson Hole, Wyo., received heaps of praise from economists, academics and central bankers from around the world for his handling of the crisis. In sharp contrast, just a year earlier, as the financial crisis intensified, Bernanke was under siege because of the unprecedented actions he was taking.
In sticking with Bernanke, Obama is looking to reassure the financial sector and foreign central banks that his administration has no plans to change course.
Any move to replace Bernanke could have been perceived as injecting politics into the Fed, especially if Obama had turned to Summers, his top economic adviser, as Bernanke's replacement.
For Obama, there was little political downside in choosing to nominate Bernanke to a second four-year term. The move displays bipartisanship and a steady, unchanging hand on the economic tiller. Fully occupied with an attempted health care overhaul, Obama's team could little afford the distraction of changing the head of the Fed.