WASHINGTON – A new assessment of President Barack Obama’s budget released Friday says the White House underestimates future budget deficits by more than $2 trillion over the upcoming decade.
The estimate from the nonpartisan Congressional Budget Office says that if Obama’s February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years – an average of almost $1 trillion a year.
Obama’s budget saw deficits totaling $7.2 trillion over the same period.
The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections.
Friday’s report actually predicts the deficit for the current budget year, which ends Sept. 30, won’t be as bad as the $1.6 trillion predicted by the administration and will instead register $200 billion less. But 10 years from now, CBO sees a $1.2 trillion deficit that’s almost $400 billion above White House projections.
White House budget director Jacob Lew said in a blog post that “CBO confirms what we already know: current deficits are unacceptably high and if we stay on our current course and do nothing, the fiscal situation will hurt our recovery and hamstring future growth.”
The estimate adds urgency to calls on Capitol Hill for action on runaway deficits that many economists fear – if left unchecked – could trigger a European-style debt crisis that could force draconian measures such as cutting federal benefits for seniors or forcing broad-based tax increases.
Just on Friday, 64 senators – 32 in each party – signed a letter to Obama calling on him to take the lead in coming up with a comprehensive deficit reduction plan along the lines of a plan issued last year by his own deficit commission. That plan called for a comprehensive overhaul of the tax code that would trade dozens of expensive tax breaks for lower individual and corporate rates, curb Social Security benefits and clamp down on spending across the budget.