http://www.bloomberg.com/apps/news?pid=20601087&sid=aVDEHvI9WH_Q

Obama Budget Plan Underestimates Deficits, CBO Says (Update1) 
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Brian 
Faler

March 5 (Bloomberg) -- President Barack Obama’s budget proposal would 
generate bigger deficits than advertised every year of the next decade, 
with the shortfalls totaling $1.2 trillion more than the administration 
estimated, according to the Congressional Budget Office. 

The nonpartisan agency said today the deficit will remain above 4 
percent of the nation’s gross domestic product for the foreseeable 
future while the publicly held debt will zoom to $20.3 trillion, 
amounting to 90 percent of GDP by 2020. By then, interest payments on 
the debt will have quadrupled to more than $900 billion annually, the 
report said. 

Deficits between 2011 and 2020 would total $9.76 trillion, the CBO said. 

Economists generally consider deficits topping 3 percent of GDP to be 
unsustainable because that means government debt is growing faster than 
the ability to pay back the money. 

“The news today from CBO is clear: The president’s budget will continue 
to lead our nation into a fiscal catastrophe -- an ever worse one than 
the president’s own numbers suggest,” said Representative Paul Ryan of 
Wisconsin, the top Republican on the House Budget Committee. 

White House Office of Management and Budget spokesman Kenneth Baer said 
the report “highlights how sensitive and uncertain budget projections 
are.” 

Baer also said, “What is certain is that the irresponsibility of the 
past put the country on an unsustainable fiscal trajectory.” 

Independent View 

The CBO report is designed to give Congress an independent assessment of 
the administration’s budget request. The difference between the two 
outlooks is largely attributable to varying economic assumptions that 
affect projections of how quickly tax revenues will pour into the 
Treasury. 

Revenues will be about $2 trillion less than the administration 
projects, while spending will be lower by about $600 billion, according 
to the CBO report. 

The administration projected last month the deficit would shrink to as 
low as 3.6 percent of GDP, with the 10-year shortfall totaling $8.5 
trillion. It foresees the debt growing to 77 percent of GDP in 2020. 

The deficit for the 2010 fiscal year has been projected to be $1.6 
trillion, a record. Obama last month established an 18- member 
bipartisan panel to suggest to Congress steps that would reduce the 
shortfalls. 

To contact the reporter on this story: Brian Faler in Washington at 
bfaler{at}bloomberg.net. 

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