White House projects bigger deficits, bigger debt

Congressional budget analysts project a cumulative $7 trillion U.S. deficit from 2010-2019, a figure roughly $2 trillion less than the one projected by the White House budget office.

The nonpartisan Congressional Budget Office, in a report that came out on the same day as the White House midyear budget review, said the deficit this year will total $1.6 trillion and that putting the United States on a sustainable fiscal course will require a mix of lower spending and higher tax revenues than the amounts now projected.

The White House also projected a $1.6 trillion deficit this year, but a gloomier $9 trillion 10-year shortfall.

The federal government faces exploding deficits and mounting debt over the next decade, White House officials predicted Tuesday in a fiscal assessment far bleaker than what the Obama administration had estimated just a few months ago.

Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three-quarters the size of the entire national economy.

Obama economic adviser Christina Romer predicted unemployment could reach 10% this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3% in 2009 and 9.8% in 2010.

"This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," Romer said.

The grim administration projections came on a day of competing economic news. The Congressional Budget Office, which has predicted less economic growth than the White House in the past, was also scheduled to announce revised budget projections on Tuesday.

Obama himself may have drowned out the rising deficit news with the announcement Tuesday that he intends to nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The Bernanke news could neutralize any disturbance in the financial markets caused by the high deficit projections.

The deeper red ink and the gloomy unemployment forecast present President Obama with an enormous challenge. The new numbers come as he prods Congress to enact a major overhaul of the health care system — one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit, but lawmakers have been unable to agree on revenues that cover the cost.

What's more, the high unemployment could last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.

Republicans were ready to pounce.

"The alarm bells on our nation's fiscal condition have now become a siren," Senate Minority Leader Mitch McConnell, R-Ky., said. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone — spending, borrowing and debt are out of control."

House Budget Committee Ranking Republican Paul Ryan of Wisconsin issued the following statement: "Today's news confirms what we've all known: Washington's spending binge has made a bad situation even worse – driving deficits to unprecedented levels, and plunging our nation deeper in debt."

Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...