The U.S. national debt will nearly double over the next 10 years as recession crimps government revenue while spending on retirement and medical benefits soars, official forecasts said on Tuesday.
But an estimate by the independent Congressional Budget Office took a somewhat more optimistic view of the fiscal funding gap than a separate White House midsession budget forecast, which projected a cumulative $9 trillion deficit between 2010 and 2019.
CBO's judgment pegged this number almost $2 trillion lower, at $7.1 trillion, because it assumed higher tax revenues.
The national debt now stands at more than $11 trillion.
However, both estimates anticipate a relatively swift decline in the size of the deficit in the years immediately ahead, on the basis of a return to growth in 2010, as the worst U.S. recession since the Great Depression comes to an end.
White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass President Barack Obama's healthcare reform, which is in trouble with lawmakers while opinion polls show it losing popular support.
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 size of the fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform now.
Obama's central policy priority of overhauling the U.S. healthcare system has already run into opposition from angry from critics who complain its $1 trillion pricetag is too high and who worry it will limit choice.
NEAR-TERM FORECASTS SIMILAR
The White House forecasts a $1.58 trillion deficit in fiscal 2009, matching the numbers of the CBO, while it has the deficit at $1.5 trillion in 2010, a touch higher than the $1.48 trillion projected by CBO.
One reason CBO and OMB can end up with different numbers is technical. The CBO employs a baseline method which only takes into account policies that have already become law.
On the other hand, the administration's forecasts can reflect the economic impact of policies it hopes to implement, even if they have not yet been approved by lawmakers.
Critics claim this means it can brush up its numbers to make them look better, even if the chances that it can get its full policy agenda through Congress is remote.
For example, the CBO assumes the there would be no patch for the Alternative Minimum Tax, meaning millions more Americans would have to pay higher taxes, even though Congress has agreed a temporary reprieve every year to prevent this happening. In addition, CBO assumes the tax cuts delivered by President George W Bush will expire at the end of 2010.
Orszag said that the White House numbers also assumed that some of the Bush tax cuts would be extended. Obama has pledged not to raise taxes on U.S. households earning less than $250,000 a year.