Budget experts predict $1.6 trillion deficit

By Walter Alarkon
Posted: 08/17/09 06:56 AM [ET]

 

This year’s federal budget deficit will be bigger than any previous deficit, but it won’t be as big as once expected.  Both the White House and Congressional Budget Office (CBO), Washington’s official fiscal scorekeeper, projected the 2009 deficit to be slightly more than $1.8 trillion for 2009. But budget experts said the deficit will be closer to $1.6 trillion when the fiscal year ends Sept. 30.   “I think everybody anticipates it will be slightly less than what was expected in the spring,” said William Hoagland, a former Senate Republican budget aide.   Spending this year through July has increased by $530 billion, or 21 percent, compared to last year, the CBO said. Bailouts for banks and the mortgage giants Freddie Mac and Fannie Mae have cost $252 billion just in fiscal 2009.  Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent, compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes.  Fiscal conservatives will be looking to the White House’s midyear budget review, due out later this month, to see how quickly the Obama administration plans to pare those deficits down.  A big reason for the smaller-than-expected deficit is that the Obama administration won’t need the $250 billion it reserved for more financial bailouts, said Hoagland, now a vice president for public policy at CIGNA Corp. With big banks such as Goldman Sachs and Bank of America reporting large profits in the last quarter, the administration is unlikely to ask Congress for the extra cash, which lawmakers have been reluctant to hand over.

http://thehill.com/leading-the-news/budget-experts-predict-1.6-trillion-deficit-2009-08-17.html

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