WASHINGTON (AP) – This year’s US government deficit will exceed $1.3 trillion, Congress’ official budget analysts projected Thursday in a report underscoring election year perils both parties face as they struggle to balance conflicting demands to trim budget shortfalls, spark the economy and cut taxes.
The nonpartisan Congressional Budget Office said this year’s budget gap would be $71 billion less than last year’s red ink, thanks to a reversal of recent trends that have seen years of steadily rising government spending and falling federal revenues.
Even so, that would leave this year’s deficit as the second largest ever in dollars, trailing only last year’s $1.4 trillion. To put those numbers in perspective, the shortfalls for 2009 and 2010 are each three times as big as the government’s annual deficit had ever been previously.
The report immediately became fodder for partisan finger-pointing over the deficit, a concern of voters in the shadow of this fall’s elections, which will determine control of Congress.
Sen. Judd Gregg, top Republican on the Senate Budget Committee, said the report highlighted that a “spending spree” by Congress, including enactment of President Barack Obama’s health care overhaul, was driving annual deficits and the cumulative federal debt skyward.
“Today’s CBO outlook only underscores what we already know - the current pace of US spending is unaffordable and unsustainable, and without a change in direction, this country is headed for fiscal calamity,” Gregg said.
Senate Budget Committee Chairman Kent Conrad, a Democrat, said helping the economy recover must be the top priority. But he said to address long-term budget pressures like the retirement of baby boomers, “we must start now to enact deficit reduction policies that will kick in after the economy has more fully recovered.”
Because the new health care law not only expands coverage but raises some taxes and cuts Medicare reimbursements to providers, the budget office estimates it will save the government $179 billion over the coming decade.
Thursday’s report clearly etched the challenges lawmakers face in wrestling with the nation’s fiscal problems.
The budget office projected that annual deficits will fall to a far more manageable $438 billion by 2014 as the economy recovers. A growing economy means higher federal revenue and lower spending for unemployment benefits and other programs that help low-income people.