March 20,2009

CBO Predicts $2.3 Trillion More Red Ink than White House

M E M O R A N D U M

To: Reporters and Editors
Fr: Jill Gerber for Sen. Grassley, 202/224-6522
Re: New CBO projections on debt
Da: Friday, March 20, 2009

Sen. Chuck Grassley, ranking member of the Committee on Finance and a senior
member of the Budget Committee, today made the following comment on the
Congressional Budget Office’s release of the latest projections for the budget and
economic outlook.

“CBO’s word is the gospel. Congress and the Administration need to get the
message. The buck stops with the American taxpayer. People can afford only so much
government spending, even for the worthiest-sounding causes. The White House should
take a break from the heavy sales job on the budget and explain missing the mark on red
ink by $2.3 trillion.”

The CBO report is available here:

http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf

The President’s proposed budget, “A New Era of Responsibility: Renewing
America’s Promise,” is available here:

http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf

The text of an Associated Press story follows.

US deficit forecast to hit $1.8 trillion this year

By ANDREW TAYLOR, Associated Press Writer

WASHINGTON – President Barack Obama's budget would generate deficits averaging
almost $1 trillion a year over the next decade, according to the latest congressional
estimates, significantly worse than predicted by the White House just last month.

The Congressional Budget Office figures, obtained by The Associated Press Friday,
predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's
$2.3 trillion worse than the White House predicted in its budget.

Worst of all, CBO says the deficit under Obama's policies would never go below 4
percent of the of the economy, figures that economists agree are unsustainable. By
the end of the decade, the deficit would exceed 5 percent of gross domestic product, a
dangerously high level.

The latest figures, even worse than expected by top Democrats, throw a major monkey
wrench into efforts to enact Obama's budget, which promises universal health care for all
and higher spending for domestic programs like education and research into renewable
energy.

Many Democrats were already uncomfortable with Obama's budget, which promises to
cut the deficit to $533 billion in five years. The CBO says the red ink for that year will
total $672 billion.

The worsening economy is responsible for the even deeper fiscal mess inherited by
Obama. As an illustration, CBO says that the deficit for the current budget year, which
began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House.
The 2009 deficit, fueled by the $700 billion Wall Street bailout and diving tax revenues
stemming from the worsening recession, is four times the previous $459 billion record set
just last year.

The CBO's estimate for 2010 is worse as well, with a deficit of almost $1.4 trillion
expected under administration policies, about $200 billion more than predicted by
Obama.

By the end of the decade, the deficit under Obama's blueprint would go back up to $1.2
trillion.

Democrats in Congress are readying Obama's budget for preliminary votes next week,
and they promise to cut the deficit in half within five years.

Democrats are likely to curb somewhat Obama's request for a 9 percent increase in nondefense
agency budgets.

Obama's $3.6 trillion budget for the 2010 fiscal year beginning Oct. 1 contains ambitious
programs to overhaul the U.S. health care system and initiate new "cap-and-trade" rules
to combat global warming.

Both initiatives involve raising federal revenues sharply higher, but those dollars
wouldn't be used to defray the burgeoning deficit.

Republicans say Obama's budget plan taxes, spends and borrows too much, and they've
been sharply critical of his $787 billion economic stimulus measure and a just-passed
$410 billion omnibus spending bill that awarded big increases to domestic agency
budgets.

The administration says it inherited deficits totaling $9 trillion over the next decade and
that its budget plan cuts $2 trillion from those deficits. But most of those spending
reductions come from reducing overseas costs for the war in Iraq.