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wild1
08-25-2009, 09:46 AM
Obama Raises ’10 Deficit Outlook 19% to $1.5 Trillion (Update1)

By Roger Runningen and Brian Faler

Aug. 25 (Bloomberg) -- U.S. unemployment will surge to 10 percent this year and the budget deficit will be $1.5 trillion next year, both higher than previous Obama administration forecasts because of a recession that was deeper and longer than expected, White House budget chief Peter Orszag said.

The Office of Management and Budget forecasts that the U.S. economy will shrink 2.8 percent this year, worse than the 1.2 percent contraction the OMB projected in May. For next year, the budget office said the gross domestic product will grow 2.0 percent, less than the 3.2 percent expected in May. By 2011, the economy would be well on its way to recovery, growing at a 3.8 percent annual rate, according to the administration’s mid-year economic review, released this morning.

“While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the budget office’s report said. “The long-term deficit outlook remains daunting.”

Separately, the nonpartisan Congressional Budget Office today predicted that the jobless rate would average 10.2 percent next year, gloomier than the White House projection, and forecast the deficit for this year at $1.6 trillion, slightly worse than the White House estimate.

Impact on Agenda

The budget shortfall for 2010 would mark the second straight year of trillion-dollar deficits. Along with the unemployment numbers, the deficit may weigh down President Barack Obama’s drive for his top domestic priority, overhauling the U.S. health care system.

“It throws a wrench in health-care reforms,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said in an interview before the report was released. “No matter the specific numbers, they’re a constant reminder that we’re in bad, bad shape.”

House Republican Leader John Boehner of Ohio seized on the numbers to call for the Democrat-controlled Congress to impose “strict annual caps on federal spending.”

The health-care overhaul “is just the latest in a long line of expensive Democratic experiments that will add to the deficit, raise taxes on families and small businesses and cost more American jobs,” Boehner said in a statement.

Slower Growth

The projected deficit for the fiscal year that begins Oct. 1 is higher than the $1.26 trillion forecast in May and reflects expectations that economic growth will be slower this year and next because of “the severity of the crisis in the U.S. and in our trading partners,” said Christina Romer, White House chief economist, who along with Orszag briefed reporters on the report.

The administration said last week that the deficit for the 2009 fiscal year, which ends Sept. 30, will peak this year at $1.58 trillion before narrowing over next decade. That is less than the $1.84 trillion projected in May because budget officials were able to delete hundreds of billions of dollars that had been set aside for bank bailouts.

Last year’s deficit was $459 billion.

Over the next decade, the budget picture is darker, with the 10-year deficit reaching $9.05 trillion, up from $7.1 trillion forecast in May, the budget office said Aug. 19.

“Whatever their cause, the administration is very concerned about these out-year deficits, and getting those deficits under control is a top priority of the administration,” Orszag said.

‘Sustainable Path’

He said the budget blueprint Obama submits to Congress in February will “include proposals to put the nation back on a fiscally sustainable path.” He declined to give specifics.

The median estimate of 31 economists in a Bloomberg News survey completed Aug. 21 was for a fiscal year 2010 deficit of $1.3 trillion.

“The market will view this as a very consensus-oriented forecast” and there won’t be any significant reaction, Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.

Zandi predicted Congress will pass a second “mini” stimulus bill next year of about $250 billion to aid jobless workers, state governments and tax credits to help home buyers. “The economy will be growing at an uncomfortably slow rate, not enough to bring down unemployment, and of course it’s an election year” for Congress, he said.

Orszag defended the trillion-dollar deficits during a recession and said the government must reduce them as the economy recovers.

Paying for Programs

“The first step is to stop making those deficits worse” by enforcing pay-as-you-go legislation so that “any new tax or entitlement” programs are paid for, and by adopting an overall of the U.S. health-care system that doesn’t add to the deficit, he said.

“I know there are going to be some who say this report proves we can’t afford health reform,” Orszag said. “I think that has it backwards,” because savings must be squeezed from the system.

Even with economic conditions worse that originally forecast, Romer said “we do expect positive GDP growth by the end of this year” for the fourth quarter, as the economy reaches “a turning point.” This is in line with 94 percent of Blue Chip economists, according to Orszag.

“A return to employment growth will take longer,” Romer said.

Unemployment Rate

Obama and his advisers have repeatedly warned that their unemployment forecast of 8.1 percent for 2009 from earlier this year would be have to be revised. The president said in a Bloomberg Television interview in June that he expected it to reach at least 10 percent before declining.

The jobless rate, which hit 9.5 percent in June before dipping to 9.4 percent last month, likely will rise to 10 percent by the end of 2009, averaging 9.3 percent for the entire year, Romer said. It will worsen to a 9.8 percent average in 2010, instead of the 7.9 percent estimate in May.

“It’s in the fourth quarter of this year that we expect it to peak,” Romer said. “The recession was, simply, worse than” government forecasters expected, she said. “None of us has a crystal ball.”

Romer said the economic stimulus package probably is adding “between 2 and 3 percentage points” to economic growth in the second quarter of this year, blunting conditions that would have been worse. A report on the effect of the stimulus program is due to Congress next month, she said.

Inflation will remain subdued. Projections for the consumer price index show a contraction to 0.7 percent this year, rising to 1.4 percent next year and 1.5 percent in 2011, Romer said.

The economic assumptions were compiled by the Council of Economic Advisers, Treasury Department and the Office of Management and Budget. The estimates reflect conditions as of early June.

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.netBrian Faler in Washington at bfaler@bloomberg.net
Last Updated: August 25, 2009 10:51 EDT

wild1
08-25-2009, 09:50 AM
White House projects bigger deficits, bigger debt



WASHINGTON – 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 percent this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3 in 2009 and 9.8 percent 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 Barack 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."

The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year. Romer projected that the economy would expand in 2010, but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.

Both Romer and budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that Obama pushed through Congress as one of his first major acts as president.

At the same time, the continuing stresses on the economy have, in effect, increased the size of the stimulus package because the government will have to spend more in unemployment insurance and food stamps, Orszag said. He said the cost of the stimulus package — which spends most of its money in fiscal year 2010 — will grow by tens of billions of dollars above the original $787 billion.

For now, while the country tries to come out of a recession, neither spending cuts nor broad tax increases would be prudent deficit-fighting measures. But Obama is likely to face those choices once the economy shows signs of a steady recovery, and it could test his vow to only raise taxes on individuals making more than $200,000.

Still, 10-year budget projections can be "wildly inaccurate," said Stan Collender, a partner at Qorvis Communications and a former congressional budget official. Collender notes that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.

The Obama administration did tout one number in its budget review: The 2009 deficit was expected to be $1.58 trillion, $263 billion less than projected in May. That's largely because the White House removed a $250 billion item that it had inserted as a "place holder" in case banks needed another bailout.

Orszag, anticipating backlash over the deficit numbers, conceded that the long-term deficits are "higher than desirable." The annual negative balances amount to about 4 percent of the gross domestic product, a number that many economists say is unsustainable.

But Orszag also argued that overhauling the health system would reduce health care costs and address the biggest contributor to higher deficits.

"I know there are going to be some who say that this report proves that we can't afford health reform," he said. "I think that has it backwards."

__

Associated Press Economics Writer Christopher S. Rugaber contributed to this report.

petegz28
08-25-2009, 09:50 AM
Since none of them have a crystal ball, perhaps Obama should not go out saying things like "unemployment will cap at 8% ONLY if we pass the stimulus"?

Donger
08-25-2009, 09:51 AM
I don't see the big deal. $11 trillion in debt is, what, only $33,000 for every individual in this country?

And, by 2020, if Obama has his way, it'll be $66,000 per person.

RINGLEADER
08-25-2009, 09:58 AM
Since none of them have a crystal ball, perhaps Obama should not go out saying things like "unemployment will cap at 8% ONLY if we pass the stimulus"?

Mark my words -- when people bring up the CBO analysis of the health care bill Obama is going to point to the difference between his numbers and the CBO numbers as evidence that the CBO analysis shouldn't be referenced.

Mark my words...

RINGLEADER
08-25-2009, 09:59 AM
I don't see the big deal. $11 trillion in debt is, what, only $33,000 for every individual in this country?

And, by 2020, if Obama has his way, it'll be $66,000 per person.


CHANGE

petegz28
08-25-2009, 10:07 AM
Mark my words -- when people bring up the CBO analysis of the health care bill Obama is going to point to the difference between his numbers and the CBO numbers as evidence that the CBO analysis shouldn't be referenced.

Mark my words...

Oh the Dems already have.

thecoffeeguy
08-25-2009, 10:09 AM
Still can't believe how much this guy gets away with...geez...

He will go down as the WORST President in history.

wild1
08-25-2009, 10:29 AM
Still can't believe how much this guy gets away with...geez...

He will go down as the WORST President in history.

He's certainly failed to accomplish anything measurable and of real consequence.

wild1
08-25-2009, 11:52 AM
http://www.reuters.com/article/marketsNews/idUSN2520609520090825?pageNumber=2&virtualBrandChannel=0

By Alister Bull and Andy Sullivan

WASHINGTON, Aug 25 (Reuters) - The U.S. national debt will nearly double over the next 10 years, government forecasts showed on Tuesday, challenging President Barack Obama's economic and healthcare overhaul agenda.

The White House midsession budget forecast and the non-partisan Congressional Budget Office both forecast that government revenues will be crimped by a slow recovery from the worst recession since the 1930s Great Depression, while spending on retirement and medical benefits soars.

The White House projected a cumulative $9 trillion deficit between 2010 and 2019, while the CBO took a more optimistic view, pegging the deficit at $7.1 trillion because it assumed higher revenues as tax cuts expire.

The spending blitz could push the national debt, now more than $11 trillion, to close to $20 trillion. The debt is the sum the government owes, while the deficit is the yearly gap between revenues and spending.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senator Mitch McConnell, the Republican leader in the Senate.

"If anyone had any doubts that this burden on future generations is unsustainable, they're gone," McConnell said, adding that economic stimulus funds should be diverted to pay down U.S. debt.

White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama's healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support.

"I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward," Orszag told reporters on a conference call.

"The size of the fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform now."


LMAO

Donger
08-25-2009, 11:53 AM
http://www.reuters.com/article/marketsNews/idUSN2520609520090825?pageNumber=2&virtualBrandChannel=0

By Alister Bull and Andy Sullivan

WASHINGTON, Aug 25 (Reuters) - The U.S. national debt will nearly double over the next 10 years, government forecasts showed on Tuesday, challenging President Barack Obama's economic and healthcare overhaul agenda.

The White House midsession budget forecast and the non-partisan Congressional Budget Office both forecast that government revenues will be crimped by a slow recovery from the worst recession since the 1930s Great Depression, while spending on retirement and medical benefits soars.

The White House projected a cumulative $9 trillion deficit between 2010 and 2019, while the CBO took a more optimistic view, pegging the deficit at $7.1 trillion because it assumed higher revenues as tax cuts expire.

The spending blitz could push the national debt, now more than $11 trillion, to close to $20 trillion. The debt is the sum the government owes, while the deficit is the yearly gap between revenues and spending.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senator Mitch McConnell, the Republican leader in the Senate.

"If anyone had any doubts that this burden on future generations is unsustainable, they're gone," McConnell said, adding that economic stimulus funds should be diverted to pay down U.S. debt.

White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama's healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support.

"I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward," Orszag told reporters on a conference call.

"The size of the fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform now."


LMAO

Can someone explain to me how the cost of private health care has anything to do, at all, with the government spending more than they take in via taxes?

wild1
08-25-2009, 11:55 AM
Can someone explain to me how the cost of private health care has anything to do, at all, with the government spending more than they take in via taxes?

Can't you read?

The fact that the government has in the past 6 months declined to the worst financial condition in its history is PRECISELY why we need to enact the biggest government spending program in history!

petegz28
08-25-2009, 11:57 AM
http://www.reuters.com/article/marketsNews/idUSN2520609520090825?pageNumber=2&virtualBrandChannel=0

By Alister Bull and Andy Sullivan

WASHINGTON, Aug 25 (Reuters) - The U.S. national debt will nearly double over the next 10 years, government forecasts showed on Tuesday, challenging President Barack Obama's economic and healthcare overhaul agenda.

The White House midsession budget forecast and the non-partisan Congressional Budget Office both forecast that government revenues will be crimped by a slow recovery from the worst recession since the 1930s Great Depression, while spending on retirement and medical benefits soars.

The White House projected a cumulative $9 trillion deficit between 2010 and 2019, while the CBO took a more optimistic view, pegging the deficit at $7.1 trillion because it assumed higher revenues as tax cuts expire.

The spending blitz could push the national debt, now more than $11 trillion, to close to $20 trillion. The debt is the sum the government owes, while the deficit is the yearly gap between revenues and spending.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senator Mitch McConnell, the Republican leader in the Senate.

"If anyone had any doubts that this burden on future generations is unsustainable, they're gone," McConnell said, adding that economic stimulus funds should be diverted to pay down U.S. debt.

White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama's healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support.

"I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward," Orszag told reporters on a conference call.

"The size of the fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform now."


LMAO


They have been so right about everything else, how could you possibly disagree with him?

wild1
08-25-2009, 11:59 AM
They have been so right about everything else, how could you possibly disagree with him?

This is a good point. They have been so dead-on about all their predictions of what the stimulus would do for us, and how bad the economy might get in a worst-case scenario. We can be certain that they have a firm grasp of the situation and they really know what they are doing when they "ask us to believe".

RINGLEADER
08-25-2009, 11:59 AM
Can someone explain to me how the cost of private health care has anything to do, at all, with the government spending more than they take in via taxes?

Even if you were going to buy into the guy's hypothesis that it does I'd like him to focus on saving those $500 billion before adding another dollar to the deficit.

Of course they can't find the savings without destroying the system because most of that "waste" comes from reimbursing doctors too much. Heck, even then the CBO says it won't result in any meaningful savings.

They could enact tort reform, like Dem strategist Bob Beckell advocates, but that just makes too much sense.

RINGLEADER
08-25-2009, 12:00 PM
This is a good point. They have been so dead-on about all their predictions of what the stimulus would do for us, and how bad the economy might get in a worst-case scenario. We can be certain that they have a firm grasp of the situation and they really know what they are doing when they "ask us to believe".

Yep. Their track record so far is pretty bad.

KC Dan
08-25-2009, 12:02 PM
"White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama's healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support.

"I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward," Orszag told reporters on a conference call."

These guys are seriously screwed up in the head because I think that they actually believe their own crap. We can't and we don't. You FAIL!

petegz28
08-25-2009, 12:03 PM
Obama has to face facts...his Chicago style and ways of doing things ain't gonna cut it

wild1
08-25-2009, 12:10 PM
Obama has to face facts...his Chicago style and ways of doing things ain't gonna cut it

They have no answers to any of these problems. In fact, they choose either to ignore them or use them as a pretext to foist unrelated expansions of government onto the legislative books.

They simply do not care about the economy, except in the ways it might be useful to implement the agenda they were hoping for anyway, which is massive government takeover of anything they can seize without getting thrown out on their ears in the midterm or in 2012