Jake Tapper notes that the Congressional Budget Office has some revised numbers on the budget deficit, if by revised we mean completely different than first reported. The deficit projection has increased 50% since January, and CBO director Douglas Elmendorf blames “enactment of recent legislation.” Gee, do you think he means Porkulus and the omnibus spending bill?
The director of the Congressional Budget Office today updated his projections for the budget and economic outlook and is now anticipating a $1.8 trillion deficit this year, and $1.4 trillion in 2010.
This is up from CBO director Douglas W. Elmendorf’s January 2009 projection of a $1.2 trillion deficit this year. In short, the US government is borrowing 50 cents for every dollar it spends.
The new projected deficit is four times the 2008 deficit, which was a record high for its time.
In the first independent analysis of Obama’s budget proposal, the nonpartisan Congressional Budget Office concluded that Obama’s policies would cause government spending to swell above historic levels even after costly programs to ease the recession and stabilize the nation’s financial system have ended.
Tax collections, meanwhile, would lag well behind spending, producing huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade — $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.
Although Obama would come close to meeting his goal of cutting in half the deficit he inherited by the end of his first term, the CBO predicts that deficits under his policies would exceed 4 percent of the overall economy over the next 10 years, a level White House budget director Peter R. Orszag yesterday acknowledged would “not be sustainable.”
The result, according to the CBO, would be an ever-expanding national debt that would exceed 82 percent of the overall economy by 2019 — double last year’s level — and threaten the nation’s financial stability.
In March, though, it appears the opinion was simply advisory based on pending budget legislation. It also depending on Pollyanna-ish growth estimates from both the CBO and the OMB that relied on an annual growth rate in 2009 of 2.2%, as well as continued purchase of American debt at cut-rate terms. Neither will occur. The Treasury’s latest auction showed that the government will have to offer higher interest rates to attract bond purchases, making the interest payments higher and driving the need for more debt. The Q1 figure of 06.1% GDP growth (annualized) will make it almost impossible to meet the 2.2% annual growth needed for the CBO projections, let alone the sunnier OMB predictions.
Now, it’s simply official. As Orzsag said, we’re on an unsustainable path, thanks to a stimulus that didn’t stimulate and a budget that will make our debt problems much worse in the next decade.