The U.S. government will have to borrow 48 cents for every dollar spent this year and 35 cents for every dollar it spends in 2010. Congressional Budget Office figures released Monday would increase the record federal deficit to more than $1.8 trillion as a result of deep recession that could stretch to 2010.
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 President Barack Obama’s fiscal and policy vision for the next decade.
The deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion due to lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps. Annual deficits would total at least $7.1 trillion over 2010-2019 under more optimistic economic assumptions â€” a 1.2 percent decline in GDP this year and a 3.2 percent growth rate for 2010.
Obama’s plan would cut $17 billion in wasteful or duplicative programs from the budget next year, but the erosion in the deficit is five times the size of his proposed savings. The deficit would be the biggest since World War II – reaching a figure of 12.9 percent of GDP this year and 8.5 percent of GDP in 2010.