But he found $20 Billion in savings somewhere so everything is
going to be alright.In its budget proposal to be released on Monday, the White House predicts a record $1.6 trillion budget deficit for the fiscal year that ends September 30, the Capitol Hill source said.
According to the estimate, deficits will narrow to $700 billion by fiscal 2013 before gradually rising back to $1.0 trillion by the end of the decade, the source said.
President Barack Obama will seek to strike a balance between reducing the deficit over the long term and stimulating the economy in the short term to ease the pain of double-digit unemployment.
Criticized by Republicans as a big spender, Obama used his State of the Union address last week to tell Americans he would dig the country out of a "massive fiscal hole."
That hole is even deeper than previously believed, according to the estimate by the White House's Office of Management and Budget.
The estimate for the current fiscal year is significantly higher than the $1.35 trillion figure forecast by the nonpartisan Congressional Budget Office last week.
Despite the difference, both estimates indicate that the deficit will continue to hover at a level not seen since World War Two, when measured as a percentage of the economy. Last year the government posted a $1.4 trillion deficit.
Update: $2 Trillion in tax increases against Americans and businesses.
Even with tax hikes and spending cuts, Mr. Obama's budget foresees a record budget deficit of $1.6 trillion this fiscal year, sliding down to $706 billion in red ink by 2014, only to begin rising again as the baby-boom generation drives up the costs of Medicare and Social Security. By 2020, the federal debt will have risen from $7.5 trillion—or 53% of gross domestic product—last year to $18.6 trillion, 77% of GDP.
Kenneth Rogoff, a Harvard University economist who has studied other countries' experiences, says debt levels already forecast would push the U.S. toward a tipping point where interest rates could soar, the dollar could plunge and the economy could face a crisis. "We will hit a point where it comes on us very quickly, and you don't want to edge up to that point," Mr. Rogoff said. "Going beyond 80% you're taking a real chance."
AP Fact checks bring up a good point about Obama's spending freeze and program cutting, Congress doesn't have to do as he says.
BUDGET: Save some $20 billion by cutting programs.
THE FACTS: Congress typically disregards most items on a president's budget-cutting wish list and puts money into the programs anyway. Several dozen of the programs Obama proposes cutting in the new budget were marked for elimination in his budget a year ago.
Obama actually got more than usual on this front in 2009, persuading Congress to go along with more than $6 billion in cuts out of the $17 billion he sought. But he achieved those savings from just a few big-ticket defense and related programs, such as canceling production of the F-22 fighter.
This time, there are fewer massively expensive programs on the list, and it will be an uphill battle trying to get lawmakers to back off on nickel-and-dime spending important to their states.
This is Obama driving America right off the cliff to fulfill his worldview of spreading the wealth but not cutting back on spending. He is smart enough to realize it which make his budget which is more optimistic in terms of what future growth is going to be more astonishing.
BTW, There is a second stimulus in the budget which they don't
want to call a stimulus.The rest of the world is going to do some pushback because there is nothing in this budget that would suggest Obama cares
to actually fix the deficit.Financial markets largely ignored the budget numbers, which had been extensively previewed, but analysts were not assured.
"We're playing with fire. Foreign countries are noticing our governance failures," said Bill Galston, a senior fellow at the Brookings Institution, a Washington think-tank.
"The dollar's standing as the world's reserve currency and our economy's standing as the world's leader are both in jeopardy," he said.
The deficit's rise in 2010 was partly due to the $787 billion stimulus package Obama pushed through Congress early last year to fight the recession.