Stimulus price tag soars; jobless rate rises

The economic stimulus bill’s price tag has risen to $862 billion, the Congressional Budget Office said Tuesday — a $75 billion jump that’s a result in part to the fact that, despite the spending, joblessness has risen and the government is paying out more than expected on unemployment benefits.

The CBO, in a new report, also said spending in fiscal 2010 will push the deficit to more than $1.3 trillion, or nearly the record $1.4 trillion deficit recorded in 2009.

The dire warnings fueled spending hysteria, which hit Washington in full force this week after Democrats’ health care overhaul got shelved last week.

President Obama plans to call for a freeze on non-security spending in Wednesday’s State of the Union address — but advisers said it wouldn’t take effect until 2011.

“In 2010, we are focused on making sure we can get people back to work. In 2011, when we believe the economy will be back on stronger footing, we’re going to be looking to make sure the footing we are putting them on is a more sustainable discretionary footing,” said White House deputy budget director Rob Nabors.

RELATED STORY:
• Trillion dollars can really tax the mind or U.S. taxpayers

Meanwhile, in Congress, lawmakers said the new numbers from Congress’s official scorekeeping agency are a further wake-up call to control runaway debt and ballooning spending.

“It’s hard to applaud a $1.3 trillion deficit,” said Senate Minority Leader Mitch McConnell, Kentucky Republican, adding Democrats have spent with abandon. “This is completely and totally unacceptable. We’re going to have to do something a lot more serious than this rather modest freeze suggestion that we’re going to hear [Wednesday] night.”

The 2010 budget picture is slightly better than last year, and CBO said it will slowly get better as the economy improves and tax revenues pick up. But the long-term challenges still remain, the budget analysts said.

Deficits will average $600 billion a year for the next decade, meaning another $6 trillion of debt will be added to the books. And entitlement programs such as Medicare, Medicaid and Social Security will continue to consume an ever-greater portion of the country’s economy.

President Clinton turned over a government in surplus in 2001, but by 2004, under President George W. Bush and a Republican Congress the deficit reached a then-record $413 billion. That figure steadily dropped through 2007, but has risen sharply in the years since, to $459 billion in 2008 and $1.4 trillion in 2009.

With the Wall Street bailout package winding down, some lawmakers had hoped spending would decline slightly on its own this year.

But CBO said spending from the stimulus package Congress passed last February will increase to $404 billion in 2010, which will keep spending levels near record highs.

Overall, CBO said it now pegs the 10-year cost of the stimulus package at $862 billion, up from the $787 billion estimate it made last February when Mr. Obama signed it into law.

A good chunk of that increase comes because the unemployment rate has gone up, not down, and the government is spending more than it projected on benefits.

Story Continues →