From the Washington Post’s Lori Montgomery, filed at 9:30 am:
The $787 billion economic stimulus package President Obama signed earlier this year is likely to cost “tens of billions of dollars” more than expected, helping to drive projections for next year’s budget deficit to $1.5 trillion, White House budget director Peter Orszag told reporters.
With unemployment climbing, costs for a variety of stimulus programs are running higher than anticipated, Orszag said, including expanded unemployment benefits, food stamps and energy grants. In an interview embargoed for release Tuesday morning, Orszag said he could not estimate the overall cost of the package, but he called Republican estimates of $900 billion “slightly high.”
Orszag’s comments came as the White House officially released new projections for the nation’s budget deficit, forecasting some good news for the current year but bad news for the future…
[G]overnment spending on social programs will continue to soar while tax collections will lag behind expectations. Instead of $1.3 trillion, the deficit in the fiscal year that starts Oct. 1 is likely to exceed $1.5 trillion, the White House said. And deficits are likely to remain elevated even after the economy recovers, averaging more than $800 billion a year through 2019, when the White House forecasts the annual gap between spending and revenue will be $917 billion.
All told, the White House predicts that the nation will have to borrow an additional $9 trillion over the next decade to finance the annual deficits, driving the accumulated national debt to nearly $23 trillion in 2019 — or 76.5 percent of gross domestic product, the highest since 1950…
That news was expected, as was this “spin” (emphasis added):
Despite the grim outlook, Orszag and Romer insisted that the stimulus package is working and said the nation’s economy would be in far worse shape without it, an opinion shared by many outside analysts. Orszag also defended the president’s call for a sweeping expansion of the nation’s health system, saying reform is essential to reining in the skyrocketing costs of Medicare and Medicaid, the health programs that are expected to drive deficits even higher in coming decades.
“I know some will say this report proves we can’t afford health reform. I think that analysis has it backwards,” Orszag said. “Given the long-term nature of that problem, we simply can’t afford to wait.”
Orszag also blamed the administration of Obama’s predecessor, George W. Bush, for the gloomy budget picture, arguing that more than half of the borrowing that will be needed over the next decade stems from Bush’s refusal to pay for expensive new policies, such as sweeping tax cuts, the war in Iraq and a new prescription drug benefit for Medicare recipients.
But what’s a nice little surprise for me is this from Peter:
As president, Obama has called for maintaining some of those policies – he would extend some of the Bush tax cuts beyond their 2010 expiration date, for example. But in light of the new deficit figures, Orszag hinted that Obama may revisit some of those decisions when he submits his next budget in February.
“Whatever their cause, the administration is very concerned about those outyear deficit figures,” Orszag said, “and getting those deficits under control is a top priority of this administration.”
10 am: Midsession report is posted here now. CBO’s report is now here. Startling news is that CBO’s baseline (current law) forecast shows 10-year deficits of $7.1 trillion now; prior estimate was $4.4 trillion. More than $2 trillion more in spending explains it… Summary Figure on page xi of the CBO report says it all (and remember, that’s withOUT the Bush tax cuts extended)…