US deficit, debt to exceed Obama forecasts: CBO
The United States will chalk up a wider budget deficit and higher national debt than projected by US President Barack Obama over the next decade, new estimates by Congress showed on Friday.business Updated: Mar 06, 2010 08:03 IST
The United States will chalk up a wider budget deficit and higher national debt than projected by US President Barack Obama over the next decade, new estimates by Congress showed on Friday.
Obama has underestimated the government budget deficit for the 2011-2020 period by 1.2 trillions dollars and the public debt by 1.8 trillion dollars, the Congressional Budget Office said.
Under Obama's latest budget projections, the cumulative deficit over the decade would be 8.532 trillion dollars, or 4.5 percent of gross domestic product, the nation's economic output.
But the CBO estimated Friday the deficit would snowball to 9.761 trillion dollars or 5.2 percent of GDP.
The CBO also forecast that the deficit for the next fiscal year, which ends on September 30, 2011, would be 75 billion dollars higher than projected by the White House.
The White House had projected that deficit falling to 1.267 trillion dollars in 2011 from a record 1.556 trillion dollars in the current 2010 fiscal year.
The CBO, an independent non-partisan agency that provides economic data to lawmakers, also said that Obama's debt projections were optimistic.
By 2020, the national debt would balloon to 20.3 trillion dollars, or 90 percent of GDP, CBO director Douglas Elmendorf said in a report Friday.
The Obama administration projects the debt at 18.5 trillion dollars or 77 percent of GDP in 10 years.
"The outlook for our debt is even worse," said Republican Senator Judd Gregg, charging that Obama's spending plans "will bankrupt the country."
A financial crisis that plunged the nation into recession required the government to launch multi-billion-dollar rescue packages to prevent the collapse of the financial industry and stimulate economic growth.
In the president's 2011 budget unveiled last month, billions of dollars are to be poured into nurturing the economic rebound and battling near double-digit unemployment.
But the government moved to cut programs, such as the US bid to return to the moon, and freeze non-security discretionary outlays.
Obama, who inherited a flood of red ink from his predecessor George W. Bush, established a bipartisan commission last month charged with finding ways to reduce the gaping US budget deficit.
Deficit problems in the United States "won't be solved overnight," he said, adding that the commission and other steps he was pursuing would be "finally putting America on the path towards fiscal reform and fiscal responsibility."
The president has promised to halve by 2013 the 1.3-trillion-dollar deficit he took on.
The president's budget predicts the deficit will tumble to 727 billion dollars, or four percent of GDP, by the end of his term in 2013.
Obama is also pursuing health care reforms under a 950-billion-dollar plan aimed at covering 31 million uninsured Americans, cutting abuses by the vast insurance industry and lowering premiums.
He pushed Congress this week to pass the historic health care overhaul by a party-line vote if needed, calling for action in the coming weeks after a bitter year-long debate.