A Less Rosy Budget Projection

Roger Runningen and Hans Nichols of Bloomberg ("Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)," May 14, 2009) report that,

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

Earlier this week, the Obama administration revised its own budget estimates and raised the projected deficit for this year to a record $1.84 trillion, up 5 percent from the February estimate. The revision for the 2010 fiscal year estimated the deficit at $1.26 trillion, up 7.4 percent from the February figure. The White House Office of Management and Budget also projected next year’s budget will end up at $3.59 trillion, compared with the $3.55 trillion it estimated previously.

Two weeks ago, the president proposed $17 billion in budget cuts, with plans to eliminate or reduce 121 federal programs. Republicans ridiculed the amount, saying that it represented one-half of 1 percent of the entire budget. They noted that Obama is seeking an $81 billion increase in other spending.

Constrained by the recession, President Obama must balance the cost of his ambitious reorganization of government priorities with tax revenues on the one hand with the difficulty in cutting existing programs on the other.  As noted in an earlier post, legislators of both parties oppose the proposed $17 billion in budget cuts.  Apparently, all spending is sacred.