President Barack Obama’s ambitious domestic policy agenda collided with spiraling deficit figures that project bulked-up federal spending will add more than $9 trillion to the national debt over the next decade — doubling the nation’s obligation to creditors.
This year’s record $1.6 trillion budget deficit will be the biggest since World War II, according to the White House and nonpartisan Congressional Budget Office. Last year’s budget deficit was $459 billion.
“I know there are going to be some who say this report proves we can’t afford health reform,” said White House Budget Director Peter Orszag. “The fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform.”
The White House has worked to sell Obama’s health care reform agenda as a cost-saving measure, and the president has said he wants any new health coverage programs to be deficit-neutral. So far, though, the $1 trillion and $1.6 trillion price tags on congressional plans have frustrated those ambitions.
But mounting public fears about the federal deficit combined with increasingly vocal opposition from Republicans in Congress may have repercussions beyond just hobbling health care.
“The projections play into the anxiety and frustration Americans feel about the level of spending and the level of debt in Washington,” said Republican strategist Matt Mackowiak. “This is going to complicate the administration’s efforts on a range of issues.”
The figures were included in an otherwise routine White House midsession budget review the administration delayed for a month and released after the president and Congress were out of Washington.
To blunt the effect of the revised numbers, which reflect a $2 trillion increase in 10-year deficit projections, Obama used the same news cycle to announce he was reappointing Federal Reserve Board Chairman Ben Bernanke to another term.
And in contrast to previous financial releases, administration officials such as Orszag kept a relatively low profile, away from the routine cable news interviews.
Predicting the economy has proven a tough bit of soothsaying for the administration. Obama ran in part on a promise to do away with the questionable accounting practices of prior presidencies, and to cut the deficit in half in four years.
But the administration in less than a year has had to retreat from its own rosy forecasts about the economy.
In February, the White House predicted the nation’s gross domestic product would shrink by 1.2 percent this year, on its way to 3.2 percent growth in 2010, 4 percent growth in 2011 and 4.6 percent growth in 2012.
Under the new estimates, though, GDP would shrink by 2.8 percent this year before increasing to 2 percent next year and 3.8 percent in 2011.
“The deficits already have been part of the reason that health care has been hard to do,” said John Fortier, a political scholar at the American Enterprise Institute. “Once you’ve done the emergency spending and your debt is on the rise, it gets harder to sell.”
