US to lower budget deficit estimate
WASHINGTON: The White House will next week cut the estimated 2009 US budget deficit to 1.58 trillion dollars, around 262 billion dollars lower than forecast, an Obama administration official said.
President Barack Obama's Office of Management and Budget (OMB) will make the announcement when it releases its delayed annual mid-year review next week, the official said, on condition of anonymity.
Obama is facing intense political pressure over the huge budget deficit, as opponents charge programs like his ambitious health care reform plan and economic rescue efforts will saddle future Americans with huge debts.
In May, the administration projected a 3.998 trillion dollar budget for 2009 with a deficit of 1.841 trillion dollars, reflecting swollen spending amid the worst economic crisis on record.
The lower-than-expected figure for 2009 was attributed to the administration spending less money than it had projected on bank failures and aid to the financial industry.
The 2009 deficit will clock in at around 11.2 percent of Gross Domestic Product (GDP).
The OMB in May adjusted its forecasts for government spending for the year 2010 to 3.591 trillion dollars with revenue estimated at 2.333 trillion dollars, resulting in a deficit of 1.258 trillion dollars.
Obama has vowed to cut the gaping budget deficit that he inherited from the Bush administration in half by the end of his mandate in 2013, warning that failure to do so could call the "American Dream" into question.
But he says that the depths of the economic crisis mean that high government spending is vital to pulling the country out of recession, after passing an 787 billion dollar economic stimulus plan soon after taking office in January.
In recent days, the president has responded to critics of his spending plans by arguing that his administration was left a huge financial hole by the previous White House of former president George W. Bush.
"When I walked into the White House, I had gift-wrapped, waiting for me at the door a 1.3 trillion dollar deficit -- 1.3 trillion," he said at a town hall meeting in Grand Junction, Colorado on Saturday.
"The financial crisis was so bad that revenues plummeted and all this money was spent in making sure that the banking system did not completely collapse. "So all the actions that have been taken -- the bank bailout, the auto bailout, all that stuff -- did spike the deficit."
Obama also blamed Republicans for huge uncontrolled spending, like a prescription drug benefit for seniors that was not paid for by cutting expenditures -- further swelling the hole in the US budget.
He also accused the Bush administration of spending billions of dollars in fighting the Iraq war but not paying for it by making cuts in programs equal to the cost.
Obama has been arguing that those programs requiring initial outlays, like his mammoth health care reform program, will actually end up saving money over the long-term and reduce the size of the shortfall.