Associated Press: Deficit to be $2 Trillion Bigger Than Estimated

WASHINGTON (AP) -- The Obama administration expects the federal deficit over the next decade to be $2 trillion bigger than previously estimated, White House officials said Friday, a setback for a president already facing a Congress and public wary over spending.

The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9 trillion instead of the $7 trillion previously estimated. The new figure reflects slumping revenues from a worse economic picture than was expected earlier this year. The officials spoke only on the condition of anonymity ahead of next week's announcement.

Ten-year forecasts are volatile figures subject to change over time. But the higher number will likely create political difficulties for President Barack Obama in Congress and could create anxiety with foreign buyers of U.S. debt.

Earlier this week, the White House revealed that it expects a budget deficit for the fiscal year ending Sept. 30 to be nearly $1.6 trillion. That figure was lower than initially projected because the White House scratched out $250 billion that it had initially added to the budget as a bank rescue contingency. The administration ultimately did not ask Congress for that money.

Still that number, together with the 10-year projection, represents a huge obstacle for an administration trying to undertake massive policy overhauls in health care and the environment.

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Bailout Tally

Sitting down? It's time to tally up the federal government's bailout tab.

There was $29 billion for Bear Stearns, $345 billion for Citigroup. The Federal Reserve put up $600 billion to guarantee money market deposits and has aggressively driven down interest rates to essentially zero.

The list goes on and on. All told, Congress, the Treasury Department, the Federal Reserve and other agencies have taken dozens of steps to prop up the economy.

Total price tag so far: $7.2 trillion in investment and loans. That puts a lot of taxpayer money at risk. Now comes President-elect Barack Obama's economic stimulus plan, some details of which were made public on Monday. The tally is getting awfully close to $8 trillion.

These trillions and trillions of dollars don't take into account other government spending.  There will be billions still in military spending, increases in social programs, abortion funding, foreign aid, and who knows what else.  Conservative estimates are that the federal budget deficit will more than triple in 2009, and if the economy doesn't perform as well as expected, the numbers could be even worse.

Nobody knows for certain how much the federal debt effects the American economy (or for that matter, the World economy).  It is certain that it does have an effect. 

For years, conservatives have clamored for a balanced budget.  Liberals and moderates seem to be unaware that the federal deficit has an effect on the economy.  Just what effect, and how much has yet to be seen.  When the economy is performing well, as it has for many of the last 25 or so years, the National debt seems to have a minimal effect on the economy.  In a bad economy, its effect is likely to be amplified. With the deficit approaching unforeseen level, I wonder if our economy will ever recover.  We have too many strikes against us.  We are sending record levels of money to our enemies in the middle east to pay for oil.  We are supporting dozens (hundreds?) of corporations that are unable to generate a profit on the their own.  We are shipping more and more of our jobs overseas, while giving more and more of our domestic jobs to illegal immigrants. 

The result of all this (and things I haven't even mentioned), is going to be an economy that may remain depressed for years, if not decades to come. 

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