The annual U.S. budget deficit, which has never reached $500 billion, will exceed $1.5 trillion this year and next year, the White House said Tuesday morning in its widely anticipated Mid-Session Review.
The budget deficit for fiscal 2010, which begins Oct. 1, is projected to total $1.502 trillion, nearly a quarter of a trillion dollars higher than the White House forecast in May, when it released its detailed 2010 budget.
In 2011, the projected deficit of $1.12 trillion would exceed $1 trillion for the third year in a row. The 2012 deficit is expected to total nearly $800 billion.
The federal debt held by the public, which totaled $5.8 trillion at the end of fiscal 2008, is expected to more than triple by the end of fiscal 2019, when it will approach $17.5 trillion, according to the administration’s latest estimates.
Related article: CBO predicts record $1.6 trillion budget deficit for 2009
For the 2010-2019 period, cumulative budget deficits will exceed $9 trillion, averaging more than $900 billion a year. That’s nearly double the $459 billion budget deficit recorded in fiscal 2008, which set the previous record before fiscal 2009.
The $9 trillion in cumulative budget deficits over 10 years is about $2 trillion higher than the Obama administration projected in February and May, but it is in line with March and June estimates by the nonpartisan Congressional Budget Office.
The budget deficit in fiscal 2009, which ends Sept. 30, is expected to total $1.58 trillion, well below the $1.84 trillion deficit that the White House projected in June.
However, the difference relates to the $250 billion placeholder that appeared in the Obama administration’s earlier budget estimates for 2009.
The placeholder was for additional funds for the bank-bailout program. The administration has not need those funds, and Congress never authorized them.
The economic assumptions in the review are less optimistic over the next few years than the assumptions that appeared in the original 2010 budget. That change explains part of the increases in cumulative deficits and the national debt.
Gross domestic product (GDP) in 2009, which the administration originally projected would decline by 1.2 percent, is now expected to decrease by 2.8 percent. The 2010 budget, first released in February, forecasted the economy would grow by 3.2 percent next year, but that has been downgraded to 2 percent in the review, which expects 2011 GDP to rise by 3.8 percent. That’s not much different from the February estimate of 4.0 percent.
The administration initially projected that the unemployment rate would decline from 8.1 percent in 2009 to 7.9 percent in 2010 and 7.1 percent in 2011. In the latest estimates, the unemployment rate is expected to rise from an upwardly revised 9.3 percent in 2009 to 9.8 percent next year before declining to 8.6 percent in 2011.