Late Friday afternoon – after the weekly new cycle – Team Obama admitted that the CBO and external economists are right: the projected 10 year budget deficit looks ,ore like $ 9 trillion than $ 7 trillion.
I guess the administration thinks the $ 2 trillion difference – a whopping 28% increase – is simply “rounding error”.
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Reuters, Obama to raise 10-year deficit to $9 trillion, Aug 21, 2009
The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.
The higher deficit figure, based on updated economic data, brings the White House budget office into line with outside estimates and gives further fuel to President Barack Obama’s opponents, who say his spending plans are too expensive in light of budget shortfalls.
The White House took heat for sticking with its $7.108 trillion forecast earlier this year after the Congressional Budget Office forecast that deficits between 2010 and 2019 would total $9.1 trillion.
The White House budget office will also lower its deficit forecast for this fiscal year, which ends September 30, to $1.58 trillion from $1.84 trillion next week after removing $250 billion set aside for bank bailouts.
Record-breaking deficits have raised concerns about America’s ability to finance its debt and whether the United States can maintain its top-tier AAA credit rating.
Treasury markets have been worried all year about the mounting deficit. The United States relies on large foreign buyers such as China and Japan to cheaply finance its debt, and they may demand higher interest rates if they begin to doubt that the government can control its deficits.
“It’s one of those underlying pieces of news that is liable to haunt the bond market at some point in the future.”
Many economists think it is unlikely the government will curtail spending, which means taxes would have to go up to cover the rising costs.
Higher taxes, of course, could slow economic recovery and growth.
Source article:
http://www.reuters.com/article/newsOne/idUSTRE57K4XE20090821
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Note: the $9 trillion doesn’t include the proposed $1 trillion cost of ObamaCare. Ouch.
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The Homa Files 