The Next Bubble: Obama's Budget Deficit - by Joshua Zumbrun
As President Obama prepares to send his budget to the US Congress next week, he's run into a bit of a stumbling block. The Congressional Budget Office said Friday that the national debt under the president's budget will be $2.3 trillion deeper than the White House estimates. Now for the real bad news: Both estimates are optimistic. If the economy continues to deteriorate faster than economists project, those numbers will balloon further.Over the next decade, the CBO projects that the White House budget will run $9.3 trillion in deficits. The White House projection had been $7 trillion. The problem for Obama, as his budget moves to Congress: Lawmakers tend to trust CBO figures over all others.
The key metric, when determining if a deficit is controllable, is looking at the ratio of the debt to the country's GDP. If this ratio is shrinking, then the debt is manageable. The White House said this would happen by 2013. The CBO says this will not happen, even by 2019.
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