Budget deficit to top record $1.58 trillion
David Lightman and Kevin G. Hall, MCT
Issue date: 8/26/09 Section: News
WASHINGTON-The White House and the nonpartisan Congressional Budget Office said Tuesday that this year's federal budget deficit will top $1.58 trillion, less than projected this spring but still historically high-high enough to pose serious problems for President Barack Obama's agenda.
"Overall," said budget director Peter Orszag, the new forecast "underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path."
Republicans quickly pounced at the latest numbers, which would shatter the previous deficit record, set last year, of $455 billion.
"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Minority Leader Mitch McConnell of Kentucky.
Democrats insisted that the new numbers, contained in separately issued reports, were hardly surprising-a view largely shared by independent analysts. Obama loyalists insisted the forecast would not derail the president's most important 2009 initiative, his plan to overhaul the nation's health care system.
"The single most important thing we can do to improve the long-term fiscal health of our nation is slow the growth rate in health care costs," said House Speaker Nancy Pelosi, D-Calif.
Obama is also seeking other potentially costly programs, notably curbs on global warming and perhaps extending some of this year's economic stimulus programs.
Many prominent economists think there is no alternative to unusually high deficits, because the financial crisis that exploded last September has deeply damaged credit markets and lending, leaving the private sector weakened and in no state to lead a recovery.
"It's scary, but all that it reflects is a weaker forecast. It doesn't change anything about what has to be done," said James K. Galbraith, a University of Texas economist who thinks that government spending is necessary regardless of how large the deficit grows.
"There is no way around this. If the private economy starts to recover, and you start to get private (sector) contribution ... then the budget deficit will fall and anything you are doing can be scaled back," he said.
"Overall," said budget director Peter Orszag, the new forecast "underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path."
Republicans quickly pounced at the latest numbers, which would shatter the previous deficit record, set last year, of $455 billion.
"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Minority Leader Mitch McConnell of Kentucky.
Democrats insisted that the new numbers, contained in separately issued reports, were hardly surprising-a view largely shared by independent analysts. Obama loyalists insisted the forecast would not derail the president's most important 2009 initiative, his plan to overhaul the nation's health care system.
"The single most important thing we can do to improve the long-term fiscal health of our nation is slow the growth rate in health care costs," said House Speaker Nancy Pelosi, D-Calif.
Obama is also seeking other potentially costly programs, notably curbs on global warming and perhaps extending some of this year's economic stimulus programs.
Many prominent economists think there is no alternative to unusually high deficits, because the financial crisis that exploded last September has deeply damaged credit markets and lending, leaving the private sector weakened and in no state to lead a recovery.
"It's scary, but all that it reflects is a weaker forecast. It doesn't change anything about what has to be done," said James K. Galbraith, a University of Texas economist who thinks that government spending is necessary regardless of how large the deficit grows.
"There is no way around this. If the private economy starts to recover, and you start to get private (sector) contribution ... then the budget deficit will fall and anything you are doing can be scaled back," he said.
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