Warning: Reality check ahead…..
From Bloomberg by Roger Runningen and Brian Faler entitled: Obama Raises ’10 Deficit Outlook 19% to $1.5 Trillion
U.S. unemployment will surge to 10 percent this year and the budget deficit will be $1.5 trillion next year, both higher than previous Obama administration forecasts because of a recession that was deeper and longer than expected, White House budget chief Peter Orszag said.
The Office of Management and Budget forecasts that the U.S. economy will shrink 2.8 percent this year, worse than the 1.2 percent contraction the OMB projected in May. For next year, the budget office said the gross domestic product will grow 2.0 percent, less than the 3.2 percent expected in May. By 2011, the economy would be well on its way to recovery, growing at a 3.8 percent annual rate, according to the administration’s mid-year economic review, released this morning.
“While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the budget office’s report said. “The long-term deficit outlook remains daunting.”
Separately, the nonpartisan Congressional Budget Office today predicted that the jobless rate would average 10.2 percent next year, gloomier than the White House projection, and forecast the deficit for this year at $1.6 trillion, slightly worse than the White House estimate.
The projected deficit for the fiscal year that begins Oct. 1 is higher than the $1.26 trillion forecast in May and reflects expectations that economic growth will be slower this year and next because of “the severity of the crisis in the U.S. and in our trading partners,” said Christina Romer, White House chief economist, who along with Orszag briefed reporters on the report.
The administration said last week that the deficit for the 2009 fiscal year, which ends Sept. 30, will peak this year at $1.58 trillion before narrowing over next decade. That is less than the $1.84 trillion projected in May because budget officials were able to delete hundreds of billions of dollars that had been set aside for bank bailouts.
Over the next decade, the budget picture is darker, with the 10-year deficit reaching $9.05 trillion, up from $7.1 trillion forecast in May, the budget office said Aug. 19.”
To say that this is unsustainable is the understatement of century.
By comparison, last year’s deficit was $459 billion, which is a nightmare in and of itself.
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