The US national debt will nearly double over the next 10 years, government forecasts showed on Tuesday, challenging US President Barack Obama’s economic and healthcare overhaul agenda.
The White House mid-session budget forecast and the non-partisan Congressional Budget Office (CBO) both forecast that government revenues will be crimped by a slow recovery from the worst recession since the 1930s Great Depression, while spending on retirement and medical benefits soars.
The White House projected a cumulative US$9 trillion deficit between next year and 2019, while the CBO pegged the total at US$7.1 trillion because it assumed higher revenues as tax cuts expire.
The spending blitz could push the national debt, now more than US$11 trillion, to close to US$20 trillion. The debt is the total sum the government owes, while the deficit is the yearly gap between revenues and spending.
“If anyone had any doubts that this burden on future generations is unsustainable, they’re gone,” Senate Republican leader Mitch McConnell said, adding that economic stimulus funds should be diverted to pay down US debt.
However, both the White House and CBO anticipate that the deficit, now at its highest level as a percent of economic output since World War II, will decline relatively swiftly in the next three years as growth resumes and federal bailout programs shrink.
White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama’s healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support. Democrats argue that the US$1 trillion plan will stem the growth of healthcare costs.
“I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward,” Orszag told reporters on a conference call.
The debate is gaining steam as Republicans seek momentum for next year’s mid-term elections, where they hope to chip away at the dominant position Obama’s Democrats enjoy in both the House of Representatives and the Senate.
Congressional Democrats said the country’s fiscal condition was a legacy from former president George W. Bush, who cut taxes while pursuing wars in Iraq and Afghanistan.
They also said spending on retirement and health benefits must be put under control as millions of Baby Boomers retire.
“Today’s budget numbers send a clear signal that the time for putting off tough choices is over and the time to act is now,” said Senate Budget Committee Chairman Kent Conrad, a Democrat.
The White House forecasts a record US$1.58 trillion deficit in fiscal 2009, matching the numbers of the CBO, while it shows the deficit at US$1.5 trillion next year, a touch higher than the US$1.48 trillion projected by CBO.
The estimates for the current fiscal year were reduced from earlier forecasts because of lower anticipated spending on financial bailout programs as markets have stabilized.
The White House has withdrawn a US$250 billion “placeholder” budget request, while the CBO estimates that actual Troubled Asset Relief Program outlays this year will be US$203 billion less than anticipated.
Both estimates, however, show annual deficits staying above US$500 billion every year until 2019, compared with a then-record US$459 billion last year. The White House shows the gap averaging 5.1 percent of gross domestic product per year through 2019, compared with 3.2 percent last year.
By 2019 the ratio of national debt to gross domestic product will rise to 69 percent from 48 percent in 2009 the White House said, closely tracking CBO’s estimates.
“The administration has always said that you have to get deficits under 3 percent of GDP to be safe. They now admit that they will not in the next 10 years,” said Douglas Holtz-Eakin, a CBO chief under Bush and chief economic adviser to Republican Senator John McCain for his presidential bid.
Archeologists in Peru on Thursday said they found the 5,000-year-old remains of a noblewoman at the sacred city of Caral, revealing the important role played by women in the oldest center of civilization in the Americas. “What has been discovered corresponds to a woman who apparently had elevated status, an elite woman,” archeologist David Palomino said. The mummy was found in Aspero, a sacred site within the city of Caral that was a garbage dump for more than 30 years until becoming an archeological site in the 1990s. Palomino said the carefully preserved remains, dating to 3,000BC, contained skin, part of the
‘WATER WARFARE’: A Pakistani official called India’s suspension of a 65-year-old treaty on the sharing of waters from the Indus River ‘a cowardly, illegal move’ Pakistan yesterday canceled visas for Indian nationals, closed its airspace for all Indian-owned or operated airlines, and suspended all trade with India, including to and from any third country. The retaliatory measures follow India’s decision to suspend visas for Pakistani nationals in the aftermath of a deadly attack by shooters in Kashmir that killed 26 people, mostly tourists. The rare attack on civilians shocked and outraged India and prompted calls for action against their country’s archenemy, Pakistan. New Delhi did not publicly produce evidence connecting the attack to its neighbor, but said it had “cross-border” links to Pakistan. Pakistan denied any connection to
TRUMP EFFECT: The win capped one of the most dramatic turnarounds in Canadian political history after the Conservatives had led the Liberals by more than 20 points Canadian Prime Minister Mark Carney yesterday pledged to win US President Donald Trump’s trade war after winning Canada’s election and leading his Liberal Party to another term in power. Following a campaign dominated by Trump’s tariffs and annexation threats, Carney promised to chart “a new path forward” in a world “fundamentally changed” by a US that is newly hostile to free trade. “We are over the shock of the American betrayal, but we should never forget the lessons,” said Carney, who led the central banks of Canada and the UK before entering politics earlier this year. “We will win this trade war and
Armed with 4,000 eggs and a truckload of sugar and cream, French pastry chefs on Wednesday completed a 121.8m-long strawberry cake that they have claimed is the world’s longest ever made. Youssef El Gatou brought together 20 chefs to make the 1.2 tonne masterpiece that took a week to complete and was set out on tables in an ice rink in the Paris suburb town of Argenteuil for residents to inspect. The effort overtook a 100.48m-long strawberry cake made in the Italian town of San Mauro Torinese in 2019. El Gatou’s cake also used 350kg of strawberries, 150kg of sugar and 415kg of
RSS