Saturday, March 21, 2009

Big Deficit Projection Tests Obama Agenda

WASHINGTON -- Congressional budget forecasters said President Barack Obama's spending blueprint would produce significantly deeper long-run deficits than the White House has projected, complicating the task of enacting his ambitious domestic agenda.

"This will make it more challenging for Congress as we craft a budget resolution," said North Dakota Democratic Sen. Kent Conrad. The Senate Budget Committee chairman will be one of the key players steering the White House spending blueprint through Capitol Hill starting next week. "The reality is, we are going to have to make adjustments to the president's budget if we want to keep the deficit on a downward trajectory," Mr. Conrad added.

Last week, Mr. Conrad warned that he is "very concerned" about the budget's long-run implications, saying the level of debt it envisioned "threatens the economic security of this country -- I believe it in my bones."

The Congressional Budget Office on Friday said that, if the Obama budget unveiled last month were approved, the federal government would run deficits averaging nearly $1 trillion a year over the next decade. The cumulative deficit from 2010-19 would be $9.3 trillion, according to the report -- $2.3 trillion more than the administration forecast last month.

One main reason for the difference in budget estimates is a difference in economic forecasts, with congressional views of long-term growth less optimistic than those of the White House -- in part because of the long-term effects of so much government borrowing. The White House said its projection is more in line with those of private-sector economists. Congressional forecasters also use different accounting rules that tend to be more conservative.


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