.White House forecasts higher budget deficit
WASHINGTON (Reuters) - The White House on Monday raised its forecast for this year's U.S. budget deficit by $89 billion due to the recession, millions of new unemployment claims and corporate bailouts.
The new estimate predicted a deficit of $1.84 trillion, or 12.9 percent of gross domestic product, for the fiscal year ending September 30. It updated the White House's February forecast of a $1.75 trillion deficit, or 12.3 percent of GDP.
The report may add to the political challenges facing President Barack Obama as he seeks to push through a new healthcare plan and other domestic initiatives.
White House officials said the gloomier picture reflected weaker tax receipts as the economy declined and higher costs for social safety-net programs such as unemployment insurance. Spending on government rescues for the financial and automobile industries also played a part.
While the Democratic-led Congress has approved the broad outline of Obama's proposed FY 2010 budget that includes initiatives on healthcare, education and other items, many lawmakers are wary about the deficit outlook.
Republicans contend Obama's agenda would sharply increase the size of government and add to a mountain of debt.
"It's clear that there is much more that we can do to protect our children and grandchildren from the unprecedented trillions in additional debt proposed by the administration," Senate Republican leader Mitch McConnell said in a statement.
The White House countered that Obama inherited huge deficits from his Republican predecessor President George W. Bush. The higher deficits "are driven in large part by the economic crisis inherited by this administration," White House budget director Peter Orszag said on his blog.
The report from the White House Office of Management and Budget also revised the deficit higher for fiscal year 2010, to $1.26 trillion, or 8.5 percent of GDP, $87 billion more than February's $1.17 trillion projection.
PROPOSED BORROWING INCREASE FOR FDIC
The fresh budget documents also included an Obama proposal to increase the Federal Deposit Insurance Corp's borrowing authority to $100 billion from $30 billion.
The increase is intended to help the agency protect bank depositors amid expectations that more financial institutions may fail this year. It would also aim to ease strains on banks by lowering the cost they pay to the government for deposit insurance.
After taking office in January, Obama released a bare-bones version of his budget in February with a spending plan for 2010 carrying a price tag of $3.55 trillion. The White House has now revised up the size of the spending plan to $3.59 trillion.
The U.S. economy shrank at a steep 6.1 percent rate in the first three months of this year.
The new White House figures bring the deficit estimates closer in line with the non-partisan Congressional Budget Office, which has forecast a $1.85 trillion deficit this year and $1.38 trillion in fiscal 2010.
To allay worries about the deficit and fend off Republican attempts to paint him as a big spender, Obama in the past week has rolled out a series of announcements aimed at showing he is working to stem the red ink.
Last week, he said he could wring $17 billion in savings from his budget by cutting waste in areas from weapons systems and education to the cleanup of abandoned mines.
But the cuts in 121 programs amounted to less than one-half of 1 percent of the total budget for 2010 and even the slim list of reductions is likely to face resistance in Congress.
A Senate Republican aide noted Monday's budget reassessment added more than five times the amount to the deficit than the administration proposed saving with the $17 billion in cuts.
Obama also unveiled a plan to toughen tax policies for multinational companies that invest abroad and to close loopholes on overseas tax shelters. Many businesses strongly oppose the proposed changes for multinational firms.
Obama on Monday highlighted more savings at a White House forum on making the U.S. healthcare system more efficient.
Trade groups such as the American Medical Association and the American Hospital Association and labor unions pledged to cut growth of health costs by 1.5 percentage points annually.
"If that were achieved you would virtually eliminate the long-term fiscal gap," budget director Orszag said told Reuters television.
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The new estimate predicted a deficit of $1.84 trillion, or 12.9 percent of gross domestic product, for the fiscal year ending September 30. It updated the White House's February forecast of a $1.75 trillion deficit, or 12.3 percent of GDP.
The report may add to the political challenges facing President Barack Obama as he seeks to push through a new healthcare plan and other domestic initiatives.
White House officials said the gloomier picture reflected weaker tax receipts as the economy declined and higher costs for social safety-net programs such as unemployment insurance. Spending on government rescues for the financial and automobile industries also played a part.
While the Democratic-led Congress has approved the broad outline of Obama's proposed FY 2010 budget that includes initiatives on healthcare, education and other items, many lawmakers are wary about the deficit outlook.
Republicans contend Obama's agenda would sharply increase the size of government and add to a mountain of debt.
"It's clear that there is much more that we can do to protect our children and grandchildren from the unprecedented trillions in additional debt proposed by the administration," Senate Republican leader Mitch McConnell said in a statement.
The White House countered that Obama inherited huge deficits from his Republican predecessor President George W. Bush. The higher deficits "are driven in large part by the economic crisis inherited by this administration," White House budget director Peter Orszag said on his blog.
The report from the White House Office of Management and Budget also revised the deficit higher for fiscal year 2010, to $1.26 trillion, or 8.5 percent of GDP, $87 billion more than February's $1.17 trillion projection.
PROPOSED BORROWING INCREASE FOR FDIC
The fresh budget documents also included an Obama proposal to increase the Federal Deposit Insurance Corp's borrowing authority to $100 billion from $30 billion.
The increase is intended to help the agency protect bank depositors amid expectations that more financial institutions may fail this year. It would also aim to ease strains on banks by lowering the cost they pay to the government for deposit insurance.
After taking office in January, Obama released a bare-bones version of his budget in February with a spending plan for 2010 carrying a price tag of $3.55 trillion. The White House has now revised up the size of the spending plan to $3.59 trillion.
The U.S. economy shrank at a steep 6.1 percent rate in the first three months of this year.
The new White House figures bring the deficit estimates closer in line with the non-partisan Congressional Budget Office, which has forecast a $1.85 trillion deficit this year and $1.38 trillion in fiscal 2010.
To allay worries about the deficit and fend off Republican attempts to paint him as a big spender, Obama in the past week has rolled out a series of announcements aimed at showing he is working to stem the red ink.
Last week, he said he could wring $17 billion in savings from his budget by cutting waste in areas from weapons systems and education to the cleanup of abandoned mines.
But the cuts in 121 programs amounted to less than one-half of 1 percent of the total budget for 2010 and even the slim list of reductions is likely to face resistance in Congress.
A Senate Republican aide noted Monday's budget reassessment added more than five times the amount to the deficit than the administration proposed saving with the $17 billion in cuts.
Obama also unveiled a plan to toughen tax policies for multinational companies that invest abroad and to close loopholes on overseas tax shelters. Many businesses strongly oppose the proposed changes for multinational firms.
Obama on Monday highlighted more savings at a White House forum on making the U.S. healthcare system more efficient.
Trade groups such as the American Medical Association and the American Hospital Association and labor unions pledged to cut growth of health costs by 1.5 percentage points annually.
"If that were achieved you would virtually eliminate the long-term fiscal gap," budget director Orszag said told Reuters television.
Yahoo
posted by madtom at 3:11 PM
6 Comments:
I wish things were only this bad. It will be this bad if unemployment improves as they calculated. And if the economy grows at 3.5% in the last quarter. And if revenues resume at last years level. That 1.8 is more likely to be 2.5+. But wait! That last line reveals our salvation! O got the healthcare industry to promise to save 2 trillion in costs, so we are saved! And if they don;t (and we know if it could be done, it would have been done and spelled out instead of 'promised') Wasn't that a happy coincidence? We 'learn' that the budget deficit they predicted 2 months ago was grossly underestimated and O meets with health trade unions who promise they can save 2 trillion ! They don't say how, and they don't commit to a damn thing, but man it sounds good. O will use their inevitable failure to justify taking over healthcare. Big health is destroying the nation by not saving the amount O squandered and He got our backs! They also fail to mention that even with this rosy scenario the debt service in 10 years will now be a TRILLION dollars. How do you pay that? Green jobs? what a fucking joke. The credit card bill is due and we already can't pay. This is a fascist playgoround and O and company are just starting to design the layout. I wouldn't have cash or bonds long term-- meaning more than a year. No one is asking how this can possibly be resolved. Inflation is the only answer and a falling standard of living is the only result. We will pay, one way or another.
You can forget about the servicing, how are we going to pay the 47 trillion babyboom retirement cost?
I think that is where O is looking. Though, I thought just like you, once they fail to deliver, he'll nationalize, or introduce one payer...We crazies all think alike.
Oh, I was definitely thinking about it. The 47 T is over 20 years (?), a 2.3 T on average per without interest. I may invest in wheelbarrows and wheelbarrow repair shops. People are going to need them for the cash they will need to come pay me for some more wheelbarrows and maintainance on the wheelbarrows they already bought from me for trips to buy modly potatoes. You'll get your SS check as promised. But watch them write legislation to allow them to 'delay' cost of living adjustments pretty soon. Take it to buy a couple of national lottery tickets. It will be an emergency, ya'know, and who wants to be unpatriotic? I bet there will be a few who actually bought O mans words and thought he could fix this thing which is the last thing he wants to do right now. The sooner he brings about was inevitable with or without him, the sooner he can 'fix' it in his image. How many chances does a man get to remake the world's most dominant nation in a couple of years? He may be a soft tyrant, but he ain't stupid. Well, stupid in that he thinks a State can improve men's lives by bringing down the privileged class and centralizing power. That's stupid, but lots of people want to believe it's true 'cuz it gives them more time for themselves.
You know I still see some hope. Maybe I should not even admit it, but I am starting to like the O man a little. I know, he's a communist, but sometimes I get the impression he just using that to get things done, and to keep the dogs at bay. Either way we will know for sure sooner then later.
Along those lines, it might be that he became president just to destroy us from the inside, but once there, the responsibilities of that office have weighed down on his soul and in the end he'll do the right thing.
Time will tell.
Hmm, 47 T/ 20 Y= 2.35T per year...sorta makes you wonder
Like all tyrants, he believes he is doing the right thing. I don't blame the collapse on him-- or even the Democrat party alone. It's been a 100 year process where we have left behind the Declaration and the Constitution in favor of centralized government which will lead to greater tyranny. He may make it feel good for the masses, but it's still tyranny. He didn't cause it, but he knowingly is accelerating it in order to form a more perfect union in his eyes and in the view of the other statists who actually believe government is the solution to all problems. The government will eventually collapse, though. We may be living in a third world status in the not too distant future, but the 1/3 of us who are essentially classic Libertarians will be the ones who will be in a position to finally reverse the process, so at least we have that to look forward to. It may get messy for a while, though. I'd trade temporary third world status and some hunger for a nation that truly values liberty and local governance again. Others endured a hell of a lot more for what we are now pissing away.
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