WASHINGTON – The staggering fiscal deficit plaguing the Obama administration will come under focus Tuesday as new U.S. government budget estimates and updated economic forecasts are released.
The White House Office of Management and Budget (OMB) said it will release at 9:30 am Tuesday a mid-term review of the federal government budget for fiscal year 2010 beginning October 1.
The Congressional Budget Office (CBO), a statutory watchdog that plays a critical support role to lawmakers by providing cost estimates, said it would give its own update on the budget and economic outlook about half an hour after the White House released its report.
The White House is expected to project a whopping nine trillion dollars in deficits over the next 10 years, -- an increase of two trillion dollars from a previous estimate, administration officials said last week.
The projected streak of red ink could further push up national debt levels as the country reels from an economic crisis and place added pressure on President Barack Obama to scale back his ambitious healthcare overhaul plan.
"The budget deficit is apt to become a greater political concern," Goldman Sachs economist Alec Philips said in a report Friday.
Voluntary response polls, which ask voters to name a top issue on their minds, have begun to register worries about the deficit after many years of little worry, he noted.
However, the estimated budget deficit for the current fiscal 2009 ending September 30 will be trimmed to 1.58 trillion dollars, around 262 billion dollars less than forecast.
In May, the administration projected a 3.998 trillion dollar budget for 2009 with a deficit of 1.841 trillion dollars, reflecting swollen spending amid the worst economic crisis on record since the Great Depression of the 1930s.
The 2009 update is expected to show the 1.58-trillion-dollar deficit will clock in at around 11.2 percent of gross domestic product (GDP) in an overall budget of 3.65 trillion dollars.
The new budget figures are expected to fuel a fierce political debate over the fiscal situation and rising national debt as Obama's Republican critics step up their calls for the president to abandon his plans to remake US healthcare and combat climate change.
"Bottom line: the budget outlook is worse, and dangerous," former CBO director Douglas Holtz-Eakin said in a memo distributed by the office of House Republican Leader John Boehner ahead of the budget forecast reports.
Boehner accused the Obama administration of "using budgetary gimmicks" to claim a lower federal deficit than previously forecast for this year.
The CBO is also expected to revise upward its long-term government deficit forecasts due to projected lower growth and higher unemployment over the coming decade, said economist Dean Baker.
"The real story in the new CBO projections should be the more dire economic outlook," said Baker, co-director of The Center for Economic and Policy Research, on the Talking Points Memo (TPM) blog.
He speculated that the CBO would expect the unemployment rate to be near 10 percent through most of 2010 and only return to "more normal levels" in 2013 or even 2014, more than six years after the collapse of the housing bubble threw the US economy into recession.
Obama has vowed to cut the gaping budget deficit he inherited from the previous George W. Bush administration in half by the end of his mandate in 2013.
But the new president has watched his poll ratings dip sharply in recent months in the face of stiff Republican attacks and mounting public concern over how to pay for his health reform plans.