The White House on Monday projected 2009 and 2010 budget deficits far higher than it forecast just 2 1/2 months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback late this year.
Economists scoffed at the administration predictions. "If they keep playing this game, they're going to have real credibility problems," predicted Brian Bethune, the chief U.S. financial economist at IHS Global Insight.
The new administration budget said that the fiscal 2009 deficit would reach $1.8 trillion, or $89 billion more than forecast in February, while the 2010 figure now is estimated at $1.26 trillion, or $87 billion above the previous number. The fiscal 2008 deficit was $459 billion.
It means that the government will have to borrow nearly 50 cents for every dollar it spends. The figures dwarf the $17 billion in budget reductions that President Barack Obama proposed last week, reductions that Congress is unlikely to approve in full.
Budget Director Peter Orszag, writing on his blog, explained that the latest changes, which are the final pieces of Obama's rollout of his $3.6 trillion fiscal 2010 budget, reflect "upward technical revisions" caused largely by lower-than-expected revenues and higher-than-anticipated costs for rescuing financial institutions.
On health care, Obama said that a pledge by leaders of the hospital, drug and insurance industries to contain the nation's skyrocketing health-care tab is "a watershed event" in a years-long campaign to make coverage available to all Americans. But, what does that mean for the nation's 50 million uninsured residents?
Medical providers have a long track record of avoiding fiscal constraints, as witnessed by the government's efforts to tamp down Medicare costs. And none of the health groups at the White House can actually dictate prices to their members.
There's one more catch: Even if every penny of the promised savings shows up, not all of it would be used to help cover uninsured Americans.
An Associated Press analysis found that transportation stimulus dollars are not making their way to communities that need them most.
The review of more than 5,500 planned projects nationwide is the most complete picture available of where states plan to spend the first wave of highway money. It reveals that states are planning to spend 50 percent more per person in areas with the lowest unemployment than in communities with the highest.
White House spokesman Robert Gibbs said, "Just because a road project is in one part of one county doesn't mean the benefits of those jobs created or the economic impact of that spending is simply isolated to that one area."