'Historic' deficit a political thorn

The federal budget deficit will hit a record $1.6 trillion this year, a figure that could threaten President Obama's agenda, complicate 2010 congressional campaigns and set up big political battles over government spending.

"We should all be extremely concerned about these numbers because they're historic," said former Texas congressman Charles Stenholm, a conservative Democrat known as a deficit hawk. "No country in the past has built up these kinds of debts and deficits and survived."

The political themes were drawn as soon as the White House and non-partisan Congressional Budget Office released projections Tuesday of mounting deficits and debt, an unemployment rate that will hit 10% nationally and a shrinking economy.

House Budget Committee Chairman John Spratt, D-S.C., called the deficit projections "a legacy of the Bush administration and of the worst recession since the 1930s."

The White House said a dramatic drop in tax collections, combined with massive spending in an effort to jump-start the economy, is causing the budget deficit to more than triple from 2008's deficit of $459 billion. Nevertheless, the $1.6 trillion estimate for the fiscal year that ends Sept. 30 is lower than what was previously forecast because of reduced spending to help prevent bank failures.

White House budget director Peter Orszag said the combined deficit projections for 2010-19 — ranging from $7.14 trillion to $9 trillion — highlight the urgency to overhaul the nation's health care system, Obama's top domestic priority.

"I know there are going to be some who say that this report proves that we can't afford health reform," Orszag said, referring to proposals to spend $1 trillion or more on a health care overhaul. "We simply can't afford to wait."

Long-term projections, required by law, often are off base because they can't take into account major events that impact the economy, such as the 9/11 terrorist attacks or Hurricane Katrina.

Outside analysts said the deficit numbers reflect the recession's depth and the vast economic recovery efforts of Obama and his predecessor, George W. Bush.

Regardless, "the responsibility for dealing with it will fall unambiguously in Barack Obama's lap," said budget expert Stan Collender of Qorvis Communications. He said he expects the numbers to fuel "the biggest fight over the budget and fiscal policy in U.S. history" next year.

Republicans seeking to gain seats in next year's congressional elections outlined likely campaign themes shortly after the projections were released. "Today's reports confirm what the White House has been trying to hide: The Democrats' out-of-control spending binge is burying our children and grandchildren under a mountain of unsustainable debt," House GOP leader John Boehner said.