U.S. Headed For Record Deficit In 2009

Bush Administration Blames $482B Budget Deficit On Slumping Economy, Stimulus Payments

(CBS/AP)  The next president will inherit a record budget deficit of $482 billion, according to a new Bush administration estimate released Monday.

The administration said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. But the numbers could go even higher if the economy performs worse than the White House predicts.

The budget office predicts the economy will grow at a rate of 1.6 percent this year and will rebound to a 2.2 percent growth rate next year. That's a half percentage point more than predicted by the widely cited "blue chip" consensus of leading economists. The administration also sees inflation averaging 3.8 percent this year, but easing to 2.3 percent next year - better than the 3.0 percent seen by the blue chip panel.

"The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report.

A $482 billion deficit, however, would easily surpass the record deficit of $413 billion set in 2004.

The deficit numbers for 2008 and 2009 represent about 3 percent of the size of the economy, which is the measure seen as most relevant by economists. By that measure, the 2008 and 2009 deficits would be smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.

The administration actually underestimates the deficit, however, since it leaves out about $80 billion in war costs. In a break from tradition - and in violation of new mandates from Congress - the White House did not include its full estimate of war costs.

The White House in February had forecast that next year's deficit would be $407 billion, which puts the increase in the projections at $72 billion.

Figures for the 2008 budget year ending Sept. 30 will actually drop from an earlier projection of $410 billion to $389 billion, the report said.

The White House still projects that the budget will reach a surplus by 2012, helped by revenues boosted by optimistic economic projections of economic growth.

Still, the new figures are so eye-popping in dollar terms that it may restrain the appetite of the next president to add to it with expensive spending programs or new tax cuts. In fact, pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.

In Washington today Barack Obama huddled with his economic team, people who've served presidents from Carter to Clinton, even George W. Bush, reports CBS News Capitol Hill correspondent Chip Reid.

"We have to change course and we're going to take immediate action," Obama said.

One of his first priorities will be ending the Bush tax cuts for people making more than $250,000 a year, and using the money for a tax cut for the middle class.

But Obama has also called for more spending -- on everything from universal health care to a new economic stimulus package -- and with the deficit now soaring even these great minds may have trouble finding the money.

John McCain has also surrounded himself with some of the best minds in business, Reid reports, including Carly Fiorina, former CEO of Hewlett Packard, and Meg Whitman former head of E-bay.

Today they briefed reporters on the importance of cutting taxes on business to create jobs.

"Small business is the engine of growth in this economy," Fiorina said.

McCain says he'll balance the budget by the end of his first term, but critics wonder how that's possible given his support for extending all of the Bush tax cuts, Reid reports.

McCain used the news to slam both the Bush White House for its "profligate spending" and Democratic rival Barack Obama for saying he would not try to balance the budget.

"I have an unmatched record in fighting wasteful earmarks and unnecessary spending in the U.S. Senate and I have the determination and experience to do the same as President," McCain said in a statement.

Obama's campaign used the new numbers to attack McCain for embracing Bush's tax cuts. Obama, said campaign policy director Jason Furman, "will restore balance and fairness to our economy by cutting wasteful spending, shutting corporate loopholes and tax havens, and rolling back the Bush tax cuts for the wealthiest Americans, while making health care affordable and putting a middle class tax cut in the pocket of 95 percent of workers and their families."

The deficit for 2007 totaled $161.5 billion, which represented the lowest amount of red ink since an imbalance of $159 billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.

That stretch of budget surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest period of expansion in U.S. history.

In his first year in office, helped considerably by projections of continuing surpluses, Bush drove through a 10-year, $1.35 trillion package of tax cuts.

However, the country fell into a recession in March 2001 and government spending to fight the war on terrorism contributed to pushing the deficit to a record in dollar terms in 2004.

House Budget Committee Chairman John Spratt, D-S.C., said the new deficit figure confirms "the dismal legacy of the Bush administration: under its policies, the largest surpluses in history have been converted into the largest deficits in history."

[babooph]

The propaganda system has been directed to sell the big lie-THE MIDDLE CLASS ONLY PAYS A SMALL PORTION OF TAX!!!!If this were true-IT WOULD BE SIMPLE TO END THAT SMALL AMOUNT!!!!!The middle class instead will be destroyed paying it.

[rickstas]

No more tax cuts for the rich!!!!!!!!!

[jett3310]

Oh, another blame Obama for the last eight years republican, eh?
Posted by rudy654
Oh No, i''ve moved from the republican party to the democratic party, i''m ready for change. I''m self employed and i''m tired of having to work sometimes 70 to 80 hrs. a week. I''m ready to take a break and enjoy life.

[rudy654-2009]

Posted by jett3310 at 01:32 PM

Oh, another blame Obama for the last eight years republican, eh?

[jett3310]

I can''''t wait either to get Obama into the White House so we can begin to address how to fix the war in Iraq and budget deficits. I''''m glad you''''ll get your wish to test that theory about not having to work anymore and see what that''''s like.
Posted by jon2012

I''M LOOKING FORWARD TO IT, I CAN RETIRE EARLY.
We can be just like France and have a 32 hour work week and have rich democrats and repulicans foot the bill. Go Obama 08

[jett3310]

Posted by neoconRcrazy at 11:53 AM
I''m working on it right now, and when Obama is elected i''ll have nobody to thank but you and the democratic party for my new lavish lifestyle of doing nothing Go Obama 08

[rudy654-2009]

Let''''s see, who controls the country''''s purse strings? Oh, that''''s right, the 9% approval LIB congress. QUIT SPENDING!


--------------------------------------------------------------------------------

Posted by mbcsmith at 01:02 PM

AND who approves and takes the money from that purse for a war he lied about to enrich his rich pals like Halliburton and Blackwater? DUH...Idiot, your tin gawd. You are among the stupidest people who ever post. Why don''t you just stick to Limbaugh your cult leader?

[mcsuicide247]

thanks a lot bush!!!

maybe mccain could make it into 960 billion and that without the stupid war!!

[mbcsmith]

Let''s see, who controls the country''s purse strings? Oh, that''s right, the 9% approval LIB congress. QUIT SPENDING!

[neoconrcrazy]

getting the house back in order is going to be a monumental task - never before have so few done so much harm.

[ubrew12]

fsw3 said: "Let''s shut down the Department of Homeland Security, legalize or decriminalized most drugs, shut down half of our prisons, use the armed forces for our country''s defense only, yeah, there are plenty of ways to reduce our budget deficits..."

Do you realize how many Republicans you just through out of office? Republicans are ''strong'' on ''defense'', ''law enforcement'', ''security'', and all those other public cash cows you just mentioned. Basically, they seem to like jobs where they get to tell other people how to behave... at gun point. You''re right, though. The country would be much better off if those skills were used in designing alternative energy devices, new forms of transportation, etc. Breakdown fortress America!!

[jon2012-2009]

I can''''t wait for Obama to become president, i''''m excited. When he and the democrats get full control of government, let the good times roll. I wan''''t have to work anymore...
Posted by jett3310 at 10:13 AM : Jul 29, 2008

I can''t wait either to get Obama into the White House so we can begin to address how to fix the war in Iraq and budget deficits. I''m glad you''ll get your wish to test that theory about not having to work anymore and see what that''s like.

[fuzzybear9]

Hello America

I saw on the internet yesterday, a listing of some famous people that have their home mortgages in bankruptcy.

Ed Mcman (the guy with publishers clearing house) lost $4.5 miillion home to fore closure, actually his house got cleared.

Hollifield $30 million foreclosure

and a bunch others in sports, and music.

I don`t run in those circles, but to me it is puzzeling how a guy with over a million dollars of income could be in foreclosure,
thats a true mystery.
but I know, I have no tears to cry for them.

and hopefully the new mortgage bail out won`t be used on these high rollers.

sincerely Fuzzy Bear

[neoconrcrazy]

with no responsibilities so i can sit on my deck, grill steaks and drink beer off my government monthly checks. Yeah Baby !!!!!!!!!!

Posted by jett3310

aren''t you doing that already?

[ubrew12]

Americans voted Republicans into power during Reagans 8 years, and now Bush''s 8 years, because they promised to reduce the size of government. What happened?

Everyone says you can rely on Democrats to increase our taxes. True, and democrats don''t deny it. Why cant we rely on Republicans to reduce our government services? Both are politically unpopular, but acceptable to us as necessary to the society we want.

Now, Democrats are going to have to pay for their administrations AND Republican administrations of the past.

[jett3310]

zoe2006 at 10:24 AM
That''s why we have you working so hard now to help pay for my lavish lifestyle of drinking and grilling steaks. Go Obama raise those taxes to help me pay for my lifestyle

[jett3310]

I can''t wait for Obama to become president, i''m excited. When he and the democrats get full control of government, let the good times roll. I wan''t have to work anymore, i can collect benefits & pay of the backs of the rich for all my problems. Bring on the hammer and sickle baby, i''m ready to ride the fast train of socialism & marxism. I wan''t to be just like France, 32 hour work week & free Health Care and with no responsibilities so i can sit on my deck, grill steaks and drink beer off my government monthly checks. Yeah Baby !!!!!!!!!!!!

[rwassel]

Yay for borrow and spend Republicans!

[omega39-2009]

(I, by the way, am just fed up with our whole government system. I considered myself a Republican until lately, and have lost so much respect for both parties.)

Posted by aggiekat2004

Kate, I used to consider myself an independent but can see myself never voting for another Republican after the last eight years that we have endured. I cannot see myself throwing away my vote on a third party candidate (protest vote) unless they had a real legitimate chance to win. Many say there is no difference between the two parties, but I wonder if we would have seen half the garbage if Gore had made it to the WH.

[tangula-2009]

It will surely happen that neither these two presumptive presidential nominees will fully deliver their promises made in their campaigns when they take office. The deficit is too high to find conversional way to deal with it. But I have a feeling that the current Bush administration has successfully found a way, so genius that American could easily get ride of their liabilities, or transfer them to others, especially those in developing world. By depreciating the dollar considerably, they have actually reduced a huge sum of money owed to foreign countries. And at the same time, by holding the Iraqi oil tap firmly in hand while pushing up the fuel price to record high through the hands of Wall Street, a windfall fortune will automatically land into its pocket. Of course, this calculation can backfire. The world will see more terrorists and suicide bombing. But that will only happen at the other end of the world because our American have F22, F16 , aircraft carries and so on. But American influence will be hurt in the long run.