Published: May 11, 2009
The changes, reported on Monday by the Office of Management and Budget, brings the deficit for this fiscal year, which ends Sept. 30, to $1.84 trillion from a February projection of $1.75 trillion. For fiscal 2010, the new estimate is $1.26 trillion, up from $1.17 trillion.
As measured against the size of the economy, this year’s shortfall would be 12.9 percent of the overall economy, or gross domestic product. Next year’s deficit would be 8.5 percent of G.D.P. Even before the latest revisions those levels are the highest in more than 60 years, since the end of World War II.
Economists generally consider that a country’s annual deficits should not exceed 3 percent of economic output. President Obama, in his 10-year budget outline, projects that the nation will fall just below that level in his last months in office, in fiscal year 2013, though many analysts consider his economic assumptions to be too rosy.
Mr. Obama’s budget director, Peter R. Orszag, disclosed the deficit revisions in his blog on the OMB Web site on Monday. He said they were “driven in large part by the economic crisis inherited by this administration.”
Explaining what has changed since the administration’s first estimates in February, Mr. Orszag wrote, “Treasury now estimates that overall federal revenue will be less than was projected in February by between $30 billion and $50 billion in each of this year and next. We also have more information about the severity of the financial crisis facing the nation, and this is reflected in new, higher estimates for the cost of financial stabilization efforts.”
Congressional Democrats echoed the administration’s reference to the inheritance from President George W. Bush. “The higher deficit figures released today provide further evidence of the economic and fiscal mess that has been handed to President Obama,” Senator Kent Conrad of North Dakota, chairman of the Senate Budget Committee, said in a statement. “It took eight years for the previous administration to dig this hole. It is going to take time to climb our way out.”
Mr. Conrad reiterated his call for a bipartisan task force to address the long-term budget problems, particularly in the rising costs for Medicare and Medicaid. The White House is resisting the idea of an outside panel and argues that Mr. Obama’s initiative to overhaul health care will bring down costs.
In the office of the House Republican leader, Antonia Ferrier, a spokeswoman for Representative John A. Boehner of Ohio, seized on the new deficit forecast to tweak the Democratic administration for its boast last week that its “line-by-line scrub” of the federal budget had produced proposals to save $17 billion in fiscal year 2010.
The $90 billion increase in the year’s deficit estimate, she noted, is “more than five times the amount of savings proposed last week.”
Source: http://www.nytimes.com/2009/05/12/business/economy/12budget.html?_r=1&partner=rss&emc=rss
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