Last week, The Office of Management and Budget (OMB) at the White House issued its annual mid-session review of budget projections, and the numbers were staggering. The Obama administration now says budget deficits will add $9.05 trillion to the national debt over the next 10 years, almost $2 trillion more than its previous forecast.
rian Reidl, in a report for the Heritage Foundation, put those numbers into perspective. Under President Obama's direction, the government will accumulate more debt than it did under every previous president combined. By 2019, the government will be spending nearly $800 billion yearly just to pay interest on the debt, and its annual spending will equal more than $33,000 per household.
And if anything, the president is underestimating the deficits of the near future. Reidl and others point out that Obama makes very optimistic assumptions about tax revenues and the costs of a healthcare overhaul. Obama also relies on hundreds of billions being raised from the selling of emissions permits under a cap-and-trade energy system. But the House cap-and-trade bill gives away many of those permits. The Concord Coalition says a more realistic projection of future deficits would put the figure at $14.4 trillion over 10 years. "You would have to be in a coma for these numbers not to be an effective wake-up call," said Concord Coalition Executive Director Robert L. Bixby in a statement.
As with subprime lending for houses, the current levels of federal borrowing are not sustainable, many economists say, and the deficits threaten to harm the economy by requiring much higher taxes or a weakened dollar. "The bill will eventually come due with all this borrowing," Reidl says.
The new numbers from OMB came at a bad time for the president, who is trying to persuade Congress to pass a costly healthcare overhaul and perhaps even another round of stimulus spending. Last week, House Republicans were trumpeting a statement made by Democratic Rep. John Adler of New Jersey that the healthcare bill in the House "isn't good for America" because its trillion-dollar price tag is "a cost we can't afford." That was before the release of the latest deficit figures. The new deficit estimate has only emboldened opponents of Obamacare: "If the House Democrats' unaffordable $1 trillion healthcare bill wasn't dead before," said Rep. Dave Camp, a Michigan Republican, "it should be now."