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http://www.washingtonpost.com/wp-dyn/content/article/2009/08/25/AR2009082501158.html?hpid=topnews

Shocker!

White House Sharply Increases Projections of Future Deficits

By Lori Montgomery

Washington Post Staff Writer

Tuesday, August 25, 2009 9:30 AM

The $787 billion economic stimulus package President Obama signed earlier this year is likely to cost "tens of billions of dollars" more than expected, helping to drive projections for next year's budget deficit to $1.5 trillion, White House budget director Peter Orszag told reporters.

With unemployment climbing, costs for a variety of stimulus programs are running higher than anticipated, Orszag said, including expanded unemployment benefits, food stamps and energy grants. In an interview embargoed for release Tuesday morning, Orszag said he could not estimate the overall cost of the package, but he called Republican estimates of $900 billion "slightly high."

Orszag's comments came as the White House officially released new projections for the nation's budget deficit, forecasting some good news for the current year but bad news for the future. The administration now projects a deficit of $1.58 trillion for the fiscal year that ends in September, down from a projection of $1.84 trillion earlier this year. The improvement stems largely from the administration's conclusion that it will not need an extra $250 billion to bail out faltering financial institutions.

White House projections of future deficits have increased sharply, however, as the administration has recalculated its economic forecast to take into account an unusually severe recession. The White House now projects that the economy will shrink by 2.8 percent this year, grow by a sluggish 2.0 percent next year and heat up to 3.8 percent growth in 2011. Unemployment, meanwhile, is likely to climb above 10 percent in the last quarter of this year and remain there into 2010, said Christina Romer, chairman of the White House Council of Economic Advisers, who predicted an average unemployment rate of 9.8 percent next year.

As a result, government spending on social programs will continue to soar while tax collections will lag behind expectations. Instead of $1.3 trillion, the deficit in the fiscal year that starts Oct. 1 is likely to exceed $1.5 trillion, the White House said. And deficits are likely to remain elevated even after the economy recovers, averaging more than $800 billion a year through 2019, when the White House forecasts the annual gap between spending and revenue will be $917 billion.

All told, the White House predicts that the nation will have to borrow an additional $9 trillion over the next decade to finance the annual deficits, driving the accumulated national debt to nearly $23 trillion in 2019 -- or 76.5 percent of gross domestic product, the highest since 1950. (and we want a public option, basically an expansion of Medicare which is a program going broke :doh:)

Despite the grim outlook, Orszag and Romer insisted that the stimulus package is working and said the nation's economy would be in far worse shape without it, an opinion shared by many outside analysts. Orszag also defended the president's call for a sweeping expansion of the nation's health system, saying reform is essential to reining in the skyrocketing costs of Medicare and Medicaid, the health programs that are expected to drive deficits even higher in coming decades.

"I know some will say this report proves we can't afford health reform. I think that analysis has it backwards," Orszag said. "Given the long-term nature of that problem, we simply can't afford to wait."

Orszag also blamed the administration of Obama's predecessor, George W. Bush, for the gloomy budget picture, arguing that more than half of the borrowing that will be needed over the next decade stems from Bush's refusal to pay for expensive new policies, such as sweeping tax cuts, the war in Iraq and a new prescription drug benefit for Medicare recipients.

As president, Obama has called for maintaining some of those policies -- he would extend some of the Bush tax cuts beyond their 2010 expiration date, for example. But in light of the new deficit figures, Orszag hinted that Obama may revisit some of those decisions when he submits his next budget in February.

"Whatever their cause, the administration is very concerned about those outyear deficit figures," Orszag said, "and getting those deficits under control is a top priority of this administration."

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Instead it'll just bankrupt the nation

Other cuts need to be made. The long term debt and spiking deficits are a problem. I'll agree with that. But, you can't criticize the stimulus for increasing the deficit when it was designed to do so. You can criticize the choice to do it, but its not like there's a surprise that someone missed here.

Question though.... did the stimulus work? I don't know the answer, but the Dow has gone way up. I know the Dow is not a great indicator of the economy's strength, but to a lay person like me, it seems like the stimulus stabilized the economy and did in fact get credit moving again.

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Not surprising,it is inline with what the CBO projected.

About time the administration acknowledged reality,albeit on a Friday.

Wonder how long it will take them to admit the health bill is gonna be a lot more costly and intrusive as well.

Revenue neutral and keep your plan my ass:silly:

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Other cuts need to be made. The long term debt and spiking deficits are a problem. I'll agree with that. But, you can't criticize the stimulus for increasing the deficit when it was designed to do so. You can criticize the choice to do it, but its not like there's a surprise that someone missed here.

Question though.... did the stimulus work? I don't know the answer, but the Dow has gone way up. I know the Dow is not a great indicator of the economy's strength, but to a lay person like me, it seems like the stimulus stabilized the economy and did in fact get credit moving again.

You see the unemployment numbers lately?

Any wage growth?

The whole point here is Orszag finally acknowledges what many of us were saying in the winter...the stimulus will cost billions more then what we were told it would cost

And now they want a "public option" as well? :doh:

There already is a public option for old people, its called Medicare, and it is going broke

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Not exactly a surprise. The White house has ignored reason in favor of extremely optimistic predictions for some time. Why, I don't know, because you have to wonder if they seriously didn't expect eventually they would have to face reality, and people would stop trusting them.

If the White House makes a bunch of budget predictions and economic predictions that are WAY off, why then would people believe them about health care? They shot themselves in the foot because of their own pride.

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You see the unemployment numbers lately?

Any wage growth?

The whole point here is Orszag finally acknowledges what many of us were saying in the winter...the stimulus will cost billions more then what we were told it would cost

And now they want a "public option" as well? :doh:

There already is a public option for old people, its called Medicare, and it is going broke

I haven't looked at the numbers, and if I did, I wouldn't know what to do with them. Is there no reason to think those numbers are going to improve with the help of the stimulus?

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Quote from article:

"Both the White House and the CBO said the recession should end within a few months, and the CBO credited a $787 billion stimulus package President Obama signed in February with hastening the economic rebound."

Doesn't sound like it'll bankrupt the nation, but future spending definitely needs to be held in check.

I support some sort of public option for health care coverage, but I don't see how Obama pushes this through in this term.

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Other cuts need to be made. The long term debt and spiking deficits are a problem. I'll agree with that. But, you can't criticize the stimulus for increasing the deficit when it was designed to do so. You can criticize the choice to do it, but its not like there's a surprise that someone missed here.

Question though.... did the stimulus work? I don't know the answer, but the Dow has gone way up. I know the Dow is not a great indicator of the economy's strength, but to a lay person like me, it seems like the stimulus stabilized the economy and did in fact get credit moving again.

Huh? The increases in the size of the debt have nothing to do with the stimulus. The stimulus was factored into the old numbers.

As for the Dow, it's gone up mostly because of the bailouts, not the stimulus package. It's gone up because Ben Bernanke has been dumping giant piles of money into the system, and that money went into the stocks of institutions deemed "too big to fail," which thusly meant that their near-zero stock prices at the time were too low. This sparked a general rally.

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How can anybody listen to or take seriously anything that the OBAMA Administration says at this point? They came into office arrogant, and knowing it all......and at this point, they're either stupid, ignorant, or they've been lying to the public since Day One. Mis-judged the economy? That's an answer? My gosh.....where is the leadership? When will the U.S. have a President, and not a salesman who's still campaigning?

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How can anybody listen to or take seriously anything that the OBAMA Administration says at this point? They came into office arrogant, and knowing it all......and at this point, they're either stupid, ignorant, or they've been lying to the public since Day One. Mis-judged the economy? That's an answer? My gosh.....where is the leadership? When will the U.S. have a President, and not a salesman who's still campaigning?

I have several questions/issues with this post. First, it resembles a rant, as opposed to a logical and coherent argument. Second, how did Obama come into office with a great deal of arrogance? Third, if you think politicians stop campaigning when they get into office, you are either easily duped or don't pay attention to politics.

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Not surprising,it is inline with what the CBO projected.

About time the administration acknowledged reality,albeit on a Friday.

Wonder how long it will take them to admit the health bill is gonna be a lot more costly and intrusive as well.

Revenue neutral and keep your plan my ass:silly:

Me thinks the half a trillion a year spent on the military is going to do more to increase the deficit than H.R. 3200.

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How can anybody listen to or take seriously anything that the OBAMA Administration says at this point? They came into office arrogant, and knowing it all......and at this point, they're either stupid, ignorant, or they've been lying to the public since Day One. Mis-judged the economy? That's an answer? My gosh.....where is the leadership? When will the U.S. have a President, and not a salesman who's still campaigning?

For a moment, I thought you were talking about the LAST presidential administration that we had.

People such as yourself aren't going to believe Obama, so it really doesn't matter.

And I think EVERYONE misjudged the economy. Isn't that how we got here in the first place? People could only project how deep this recession was going to go. Republicans were claiming that we could wait it out and it would fix itself in a few months, while other economists were saying that this could last until 2012, or even longer.

There are no easy predictors.

But hey, don't let facts get in the way of your rant.

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Me thinks the half a trillion a year spent on the military is going to do more to increase the deficit than H.R. 3200.

Well cut it off:), I'm sure we can find better things to stimulate the economy than employing all those people and industries.

About time my kids got a real job anyway.

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