The economic stimulus bill's price tag has risen to $862 billion, the Congressional Budget Office said Tuesday — a $75 billion jump that's a result in part to the fact that, despite the spending, joblessness has risen and the government is paying out more than expected on unemployment benefits.
The CBO, in a new report, also said spending in fiscal 2010 will push the deficit to more than $1.3 trillion, or nearly the record $1.4 trillion deficit recorded in 2009.
The dire warnings fueled spending hysteria, which hit Washington in full force this week after Democrats' health care overhaul got shelved last week.
President Obama plans to call for a freeze on non-security spending in Wednesday's State of the Union address — but advisers said it wouldn't take effect until 2011.
"In 2010, we are focused on making sure we can get people back to work. In 2011, when we believe the economy will be back on stronger footing, we're going to be looking to make sure the footing we are putting them on is a more sustainable discretionary footing," said White House deputy budget director Rob Nabors.
Meanwhile, in Congress, lawmakers said the new numbers from Congress's official scorekeeping agency are a further wake-up call to control runaway debt and ballooning spending.
"It's hard to applaud a $1.3 trillion deficit," said Senate Minority Leader Mitch McConnell, Kentucky Republican, adding Democrats have spent with abandon. "This is completely and totally unacceptable. We're going to have to do something a lot more serious than this rather modest freeze suggestion that we're going to hear [Wednesday] night."
The 2010 budget picture is slightly better than last year, and CBO said it will slowly get better as the economy improves and tax revenues pick up. But the long-term challenges still remain, the budget analysts said.
Deficits will average $600 billion a year for the next decade, meaning another $6 trillion of debt will be added to the books. And entitlement programs such as Medicare, Medicaid and Social Security will continue to consume an ever-greater portion of the country's economy.
President Clinton turned over a government in surplus in 2001, but by 2004, under President George W. Bush and a Republican Congress the deficit reached a then-record $413 billion. That figure steadily dropped through 2007, but has risen sharply in the years since, to $459 billion in 2008 and $1.4 trillion in 2009.
With the Wall Street bailout package winding down, some lawmakers had hoped spending would decline slightly on its own this year.
But CBO said spending from the stimulus package Congress passed last February will increase to $404 billion in 2010, which will keep spending levels near record highs.
Overall, CBO said it now pegs the 10-year cost of the stimulus package at $862 billion, up from the $787 billion estimate it made last February when Mr. Obama signed it into law.
A good chunk of that increase comes because the unemployment rate has gone up, not down, and the government is spending more than it projected on benefits.
"Outlays for unemployment compensation in 2009 and 2010 are now estimated to be $21 billion higher than initially expected," CBO said.
The Obama administration had predicted that unemployment would not exceed 8 percent if the stimulus bill were passed. Instead, the rate has climbed into double-digits.
The government is also paying out more than expected on food-assistance programs and on federal payments to help states and localities pay interest on taxable government bonds they issued.
Republicans argue the high unemployment rate shows the stimulus package is a failure, and warned Democrats against trying to pass another jobs-creating spending bill.
"American families who are trying to stay financially afloat do not have time for any more stimulus stumbles. Instead of misnomers and rhetoric, they need tangible job-creation proposals," said Rep. Joe Wilson, South Carolina Republican.
But Democrats said the recovery package helped stave off a possible depression.
"You're going to see jobs created," Vice President Joseph R. Biden Jr. told Democratic National Committee members Tuesday. "We can't get the unemployment rate down to 6 percent after this great depression, recession, in two years, but you're going to see come the spring net increases in jobs."
The administration is trying to strike a careful balance between spending to boost a weak economy now, while promising eventual cuts.
Mr. Obama on Wednesday will propose freezing non-security discretionary spending for fiscal 2011, which begins Oct. 1, at 2010 levels. His advisers said that doesn't mean an across-the-board cut, but rather the administration will call for slashing some programs outright, while increasing spending for others. The specifics will be laid out when the president sends his budget to Congress next week.
During the 2008 presidential campaign, Mr. Obama had mocked his opponent, Sen. John McCain, for proposing deep spending cuts, saying a scalpel was the right tool.
"I think the president understands now how serious this problem is, and it requires hatchets and scalpels," Mr. McCain said Tuesday.
Mr. Nabors, the deputy budget director, said he's as certain of getting their spending cuts through as he is they'll get a health care bill done.
"The president once said something to me that has always stuck with me, which is, when we sat down to start talking about whether or not the House and the Senate could pass health care bills, people reacted very negatively," Mr. Nabors told reporters.
"The president said, don't ever bet against me. And what ended up happening was that both the House and the Senate were able to produce health care bills, which we're very confident will go through a conference process, and will soon make its way to the president's desk."
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