US to borrow 46 cents for every dollar spent
- From: jose el fontanero <josefsoplar@xxxxxxxxx>
- Date: Tue, 12 May 2009 15:51:22 -0700 (PDT)
US to borrow 46 cents for every dollar spent
By ANDREW TAYLOR, Associated Press Writer Andrew Taylor, Associated
Press Writer
Tue May 12, 12:08 am ET
WASHINGTON – The government will have to borrow nearly 50 cents for
every dollar it spends this year, exploding the record federal deficit
past $1.8 trillion under new White House estimates. Budget office
figures released Monday would add $89 billion to the 2009 red ink —
increasing it to more than four times last year's all-time high as the
government hands out billions more than expected for people who have
lost jobs and takes in less tax revenue from people and companies
making less money.
The unprecedented deficit figures flow from the deep recession, the
Wall Street bailout and the cost of President Barack Obama's economic
stimulus bill — as well as a seemingly embedded structural imbalance
between what the government spends and what it takes in.
As the economy performs worse than expected, the deficit for the 2010
budget year beginning in October will worsen by $87 billion to $1.3
trillion, the White House says. The deterioration reflects lower tax
revenues and higher costs for bank failures, unemployment benefits and
food stamps.
Just a few days ago, Obama touted an administration plan to cut $17
billion in wasteful or duplicative programs from the budget next year.
The erosion in the deficit announced Monday is five times the size of
those savings.
For the current year, the government would borrow 46 cents for every
dollar it takes to run the government under the administration's plan.
In 2010, it would borrow 35 cents for every dollar spent.
"The deficits ... are driven in large part by the economic crisis
inherited by this administration," budget director Peter Orszag wrote
in a blog entry on Monday.
The developments come as the White House completes the official
release of its $3.6 trillion budget for 2010, adding detail to some of
its tax proposals and ideas for producing health care savings. The
White House budget is a recommendation to Congress that represents
Obama's fiscal and policy vision for the next decade.
Annual deficits would never dip below $500 billion and would total
$7.1 trillion over 2010-2019. Even those dismal figures rely on
economic projections that are significantly more optimistic — just a
1.2 percent decline in gross domestic product this year and a 3.2
percent growth rate for 2010 — than those of private sector economists
and the Congressional Budget Office.
As a percentage of the economy, the measure economists say is most
important, the deficit would be 12.9 percent of GDP this year, the
biggest since World War II. It would drop to 8.5 percent of GDP in
2010.
In the past three decades, deficits in the range of 4 percent of GDP
have caused Congress and previous administrations to launch efforts to
narrow the gap. The White House predicts deficits equaling 2.9 percent
of the economy within four years.
Polling data suggest Americans are increasingly worried about mounting
deficits and debt.
An AP-GfK poll last month gave Obama relatively poor grades on the
deficit, with just 49 percent of respondents approving of the
president's handling of the issue and 41 percent disapproving. By
contrast, Obama's overall approval rating was 64 percent, with just 30
percent disapproving.
"Even using their February economic assumptions — which now appear to
be out of date and overly optimistic — the administration never puts
us on a stable path," said Marc Goldwein of the Committee for a
Responsible Federal Budget, a bipartisan group that advocates budget
discipline. "The president ... understands the critical importance of
fiscal discipline. Now we need to see some action."
For the most part, Obama's updated budget tracks the 134-page outline
he submitted to lawmakers in February. His budget remains a bold but
contentious document that proposes higher taxes for the wealthy, a
hotly contested effort to combat global warming and the first steps
toward guaranteed health care for all.
Meanwhile, the congressional budget plan approved last month would not
extend Obama's signature $400 tax credit for most workers — $800 for
couples — after it expires at the end of next year.
Obama's "cap-and-trade" proposal to curb heat-trapping greenhouse gas
emissions is also reeling from opposition from Democrats from coal-
producing regions and states with concentrations of heavy industry.
Under cap-and-trade, the government would auction permits to emit heat-
trapping gases, with the costs being passed on to consumers via higher
gasoline and electric bills.
Also new in Obama's budget details are several tax "loophole" closures
and increased IRS tax compliance efforts to raise $58 billion over the
next decade to help finance his health care measure. The money would
make up for revenue losses stemming from lower-than-hoped estimates
for his proposal to limit wealthier people's ability to maximize their
itemized deductions.
.
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