2009 Budget
My column from Roll Call today explains why the 2009 deficit was lower than expected, who's to blame, and why 2011 rather than 2010 is when the real deficit reduction fight will start. Then again, the 2011 fight will begin in only a few months.
Oct. 13, 2009
The Congressional Budget Office was much in the news Wednesday when its cost estimate showed that the health care bill being considered by the Senate Finance Committee would reduce rather than increase the deficit.
Compared to what Pete is forecasting for fiscal 2009, the $455 deficit 2008 deficit reported yesterday by the Treasury doesn't look that bad even though it was slightly higher than expected.
But the fact that $455 billion looks good in comparison to Pete's $900 billion deficit estimate, the more than $1 trillion I'm estimating, or the $2 trillion some are reporting doesn't mean that it's not newsworthy.
Deficits are sometimes necessary. In the current very tough economic environment, the much-higher-than-ever-before-dared-to-be-mentioned federal deficit isn't causing that much heartburn.
But the additional government borrowing won't go away when the environment improves. When the dust finally clears, the huge (10 percent or more) increase in the national debt will remain and be the budget problem of the day, year, and decade.
We'll know much more about what, if anything, Congress will be able to do with fiscal policy when returns from its two-week recess next week.
In the meantime, some of the plans that were discussed before the recess began, especially the possibility of Congress not completing a budget this year, may have to be abandoned in light of the new projection provided by the Congressional Budget Office that, contrary to what many on the Hill had hoped, the current debt ceiling will have to be raised before the election. (Here's what OMB Watch reported on the subject.)
OMB Director Jim Nussle announced today that the Bush fiscal 2009 budget, which will be submitted to Congress on February 4, will posted online and not provided in printed books to Congress, the media, and executive branch departments and agencies. Here's the full Nussle statement.
