Trillion Dollar Deficit – Thanks to economic cretin George Bush, the United States will rack up a trillion dollar deficit for the federal fiscal year already underway.
The U.S. budget deficit will swell to a record $1.186 trillion in fiscal 2009 as the global recession saps the economy, congressional budget analysts reported.
Besides the trillion dollar deficit, the Congressional Budget Office also forecast the deficit will likely fall to $703 billion in the 2010 fiscal year which begins October 1, 2009, as the U.S. recession begins to ease in the second half of this year.
The budget gaps for both years likely will be significantly greater, however, as Washington prepares to deliver a jolt to the economy with a large economic stimulus measure.
“CBO anticipates that the current recession, which started in December 2007, will last until the second half of 2009, making it the longest recession since World War Two,” the nonpartisan budget analyst for Congress said.
CBO projected the U.S. economy will shrink 2.2 percent in 2009 before growing by a modest 1.5 percent in 2010. Additionally, unemployment will continue its steep climb, rising to 8.3 percent this year and hitting 9 percent in 2010.
Obama said on Tuesday he expects deficits around $1 trillion for each of the next few years, forcing tough budget choices as he takes the government reins on January 20.
Besides trying to fix the current recession, the most significant challenge Obama will face is how to control the rapid growth in the cost of federal retiree and health benefits amid an aging population. Democrats and Republicans have been putting off these tough decisions for years.
Obama has said he fears double-digit unemployment if Congress doesn’t act fast on an economic stimulus bill that he hopes would create or maintain 3 million jobs.
Demonstrating he intends to place added emphasis on fiscal matters, Obama announced on Wednesday he was appointing former Treasury official Nancy Killefer to the new position of Chief Performance Officer to oversee a budget and spending reform effort from the White House.
‘GRIM EPITAPH’
House Budget Committee Chairman John Spratt, a South Carolina Democrat, said the new CBO $1.2 trillion dollar deficit forecast represented “a grim epitaph for the Bush administration,” noting the budget surpluses the president inherited in 2001.
And while he supports Congress spending money to try to pull the country out of its economic recession, Spratt added, “We must try wherever possible to minimize the impact on the budget over the medium and long term.”
The huge budget deficits are in contrast to the roughly $455 billion deficit suffered last year — also a record — and do not count an economic stimulus plan that Obama and Congress will consider over the next month, which could total $775 billion or more over two years.
In the coming months, Congress also is also expected to be called on to approve tens of billions of dollars in additional funding for the wars in Iraq and Afghanistan. Already the administration has spent $857 billion on the two wars.
This year’s deficit also was worsened by an economic stimulus measure that Congress and President George W. Bush enacted a year ago that totaled $168 billion over two years.
The Bush administration, which began with large budget surpluses in 2001, has loaned hundreds of billions of dollars to help ailing financial institutions recover after they made risky real estate investments that went sour.
That bailout could end up costing the government $184 billion this year, CBO speculated, and another $5 billion next year. So far, the Treasury Department has spent only about half of the $700 billion in bailout money authorized by Congress.
CBO also estimated deficits over the next five years will total an additional $1.972 trillion.
When Bush took office, the total U.S. debt was $5.7 trillion. It now stands at more than $10.6 trillion because of increased government spending coupled with lower tax revenues related to Bush’s tax cuts and the slowing economy.
And that’s the latest news on the fiscal 2009 $1.2 trillion dollar deficit.
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