Budget deficit to top record $1.58 trillion
David Lightman and Kevin G. Hall, MCT
Issue date: 8/26/09 Section: News
The new deficit forecasts are below the White House's $1.84 trillion May number for the fiscal year ending Oct. 1, as administration estimates of funding needed for financial industry rescues declined.
However, the new figures still mean the deficit would total 11.2 percent of gross domestic product, a post-World War II record. And the White House's "mid-session review" of the budget predicted that during the next 10 years, deficits would total about $9.05 trillion, up from the $7.1 trillion it forecast earlier this year.
The CBO stuck to the $7.1 trillion figure, assuming that Bush-era tax cuts set to expire after next year will expire. The White House assumes that some of the tax cuts will remain, since Obama has said he doesn't want to raise taxes on the middle class, though he's indicated he'd raise taxes on the wealthy.
The CBO had some good news, predicting that the economy would grow at an annual rate of 1.6 percent in the second half of this year, after sharp declines in the first half.
But it anticipated at least several more months of employment losses. The CBO saw unemployment, 9.4 percent last month, averaging 10.2 percent next year before falling to 9.1 percent in 2011.
(EDITORS: STORY CAN END HERE)
The timing of the new figure's release suggested the Obama administration fears its impact. Congress is in the middle of a monthlong summer break, Obama was on vacation in Massachusetts, and the data were unveiled a half-hour after the president nominated Federal Reserve Board Chairman Ben Bernanke to another term.
When Congress returns Sept. 8, it faces a host of budget-related challenges. The House is expected to consider a health care overhaul, and while Pelosi insists that it won't increase the deficit, others are skeptical.
At the same time, lawmakers will be racing to finish the budget for fiscal year 2010 before it begins on Oct. 1. The CBO predicted a 2010 deficit of $1.38 trillion.
In the background will be Republican critics, anticipating congressional elections 14 months away and eager to remind voters about the big deficits.
However, the new figures still mean the deficit would total 11.2 percent of gross domestic product, a post-World War II record. And the White House's "mid-session review" of the budget predicted that during the next 10 years, deficits would total about $9.05 trillion, up from the $7.1 trillion it forecast earlier this year.
The CBO stuck to the $7.1 trillion figure, assuming that Bush-era tax cuts set to expire after next year will expire. The White House assumes that some of the tax cuts will remain, since Obama has said he doesn't want to raise taxes on the middle class, though he's indicated he'd raise taxes on the wealthy.
The CBO had some good news, predicting that the economy would grow at an annual rate of 1.6 percent in the second half of this year, after sharp declines in the first half.
But it anticipated at least several more months of employment losses. The CBO saw unemployment, 9.4 percent last month, averaging 10.2 percent next year before falling to 9.1 percent in 2011.
(EDITORS: STORY CAN END HERE)
The timing of the new figure's release suggested the Obama administration fears its impact. Congress is in the middle of a monthlong summer break, Obama was on vacation in Massachusetts, and the data were unveiled a half-hour after the president nominated Federal Reserve Board Chairman Ben Bernanke to another term.
When Congress returns Sept. 8, it faces a host of budget-related challenges. The House is expected to consider a health care overhaul, and while Pelosi insists that it won't increase the deficit, others are skeptical.
At the same time, lawmakers will be racing to finish the budget for fiscal year 2010 before it begins on Oct. 1. The CBO predicted a 2010 deficit of $1.38 trillion.
In the background will be Republican critics, anticipating congressional elections 14 months away and eager to remind voters about the big deficits.
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