Later today, President Obama will unveil his proposed budget for Fiscal Year 2011 and it’s clear that any hope that he’s serious about reducing the budget deficit will go out the window:
President Barack Obama’s new $3.83 trillion budget—on its way to Congress Monday— anticipates an even worse deficit this year than last and no big improvement until the economy improves and the nation sheds the crushing costs of two wars overseas.
It’s a bleak, nerve-wracking landscape for any White House, but the president is still betting on significant new spending for education and clean energy initiatives, including billions in loan guarantees for the nuclear power industry.
After a record $1.4 trillion shortfall in 2009, the administration now says the red ink will reach $1.56 trillion this year and be little better, $1.27 trillion in 2011.
In fact, it’s not until 2014 and 2015— when Obama hopes to be in his second term— that he has any hope of deficits approaching a sustainable level. Even then he is banking heavily on a new bipartisan fiscal commission to really finish the job.
The outlook— more pessimistic than Congressional Budget Office deficit estimates last week—adds up to $5.08 trillion in red ink over the next five years. That’s $1.32 trillion or 35% more than the White House predicted 12 months ago; about two-thirds of this deterioration can be traced directly back to lower revenues and the higher cost of the wars.
And keep in mind that those projections assume that the Administration’s optimistic assumptions about economic growth turn out to be true. If they don’t, which they almost never do no matter who’s President, then the deficit’s are likely to be larger and even more unsustainable.
Even if these projections turn out to be true, that means that deficits will comprise some 4.5% of the economy over five years. That’s close to being unsustainable.
And what is the President doing about it ?