Friday, March 20, 2009

Budget Deficit Will Be Higher than Obama Wants to Admit

President Obama's $3.55-trillion budget has stumbled into a series of economic and political pitfalls that threaten to undercut his grandest ambitions.

The chairman of the Senate Budget Committee on Thursday projected deficits far higher than the Obama administration had calculated, possibly as much as $1.6 trillion higher over the next 10 years. The nonpartisan Congressional Budget Office is expected to issue a similar assessment today.

That bad news, combined with other recent developments, portends a rocky road for the Obama budget, which was initially hailed by congressional Democrats for promoting such liberal priorities as expanded access to health insurance and curbs on global warming.

In the three weeks since the budget was unveiled, fiscally conservative Democrats have raised concerns about proposed spending increases. Leaders of the House and Senate tax-writing committees have criticized some of Obama's proposed tax increases on wealthier Americans. And influential Democrats are backing away from using a legislative shortcut that may be Obama's best hope for passing his far-reaching health and energy policies.

An additional multibillion-dollar bailout for banks and other financial institutions, which the administration will soon propose, is expected to add more pressure to the federal government's finances.

Into that tinderbox, a lit match has come from new deficit estimates.

Where Obama's budget foresees rolling up $7 trillion in cumulative deficits over the next 10 years, Sen. Kent Conrad (D-N.D.) on Thursday pegged the deficits at $1.6 trillion higher over that period.

Conrad, chairman of the Senate Budget Committee, said the figure was calculated by his panel's Democratic staff members.

The Congressional Budget Office report today is expected to reflect a worsening deficit outlook in part because economic conditions have deteriorated in the two months since the administration set its budget assumptions. The office is expected to project lower revenue and higher spending than what Obama's budget assumed.

Sen. Ben Nelson (D-Neb.), one of about 15 moderate Democrats concerned about Obama's spending levels, said the White House might have to reassess its priorities in light of the new estimates.

"That will influence what we might think is the appropriate level of spending -- what might be put off to another budget, what we can pursue incrementally," said Nelson, a member of the budget panel.

"I think this budget is in for some tough sledding," said Sen. Lindsey Graham (R-S.C.). "Some components of his budget are going over like a lead balloon."

But House Speaker Nancy Pelosi (D-San Francisco) won't let facts and projections get in the way of her liberal agenda.

"Our priorities are the same," Pelosi said. "You can't say we are going to do less because those numbers are pessimistic."

The White House also said the projections would not force a change in the socialization of America.

"It's not productive to constantly be chasing your tail and, as things change every day, revise your numbers," was the spin from Kenneth Baer of Obama's budget office.

In other words, "Bush spent too much money and had huge deficits.  This is all his fault.  In order to get us out of this mess, we're going to have to spend even more money and have even bigger deficits!"


Anonymous,  March 20, 2009 at 12:05 PM  

According to the DemocRats it is always the Republicans fault.

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