AP sources: $2 trillion higher [10 year] deficit projected

[The Minx]

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AP sources: $2 trillion higher deficit projected
Higher number over next decade could spell trouble for Obama in Congress

WASHINGTON - 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.

Forced to raise taxes?
Economists predict a slow recovery from the recession, further testing Obama's goal of cutting the deficit to $512 billion in 2013. Even as he seeks higher revenues to pay for new climate change and health care measures, the president could face pressure to increase revenues or make deep spending cuts to tame the deficit.

Earlier long-term estimates released in February and May relied on now-outdated projections of economic growth. Then, the White House predicted the economy would shrink by 1.2 percent this year, but the economy shrank 6.4 percent in the first quarter, the worst in nearly three decades.

In its earlier projections, the White House said the deficit would be manageable if it slides to 3 percent of gross domestic product. Earlier projections barely met that standard — even after relying on optimistic assumptions like the wars in Iraq and Afghanistan costing $50 billion a year instead of the $130 billion budgeted for 2010.

Now, the deficits could easily exceed 4 percent of GDP, even after cost-cutting efforts or new revenues claimed in Obama's budget.

Such deficits have always prompted Congress and the White House to take politically painful steps to curb them, such as former President Bill Clinton's tax-heavy 1993 deficit reduction plan. A companion effort by Obama could force him to break his promise to not raise taxes on individuals making less than $200,000 a year.

9 trillion dollars over ten years is a lot of money. Even if these figures are volatile, we're still most likely looking at huge increases - $1.6 trillion in this year alone. I remember when people were shocked at 500 billion dollar deficits, how easily that seems to have ballooned.

[SirNitram]

It never fails. Democrat in office, deficit is a news story again.

On the plus side, health care is projected for a surplus.

[General Havoc]

Two Trillion however is an impressive fucking deficit, by any standards.

[SirNitram]

Two Trillion however is an impressive fucking deficit, by any standards.

No doubt there. Though not surprising giving the idiot brigade running economic policy(Free money to banks!!!!), tax policy(Let's use Reconciliation to slash taxes again!), war spending(3 trillion or so on Iraq), and, while I stand by the fact it was needed(Even Krugman, a relentless pessimist on the bill that actually passed, admits it's a major reason things are starting to level out), the stimulus.