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New debt figures cloud Obama agenda

WASHINGTON — President Barack Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House has previously estimated, congressional budget analysts said Friday.

In the first independent analysis of Obama's budget plan, the nonpartisan Congressional Budget Office concluded that Obama's policies would cause government spending to swell far above historic levels even after costly programs to ease the recession and stabilize the nation's financial system have ended.

Tax collections, meanwhile, would lag well behind spending, producing huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade — $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.

Although Obama would come close to meeting his goal of cutting in half the deficit he inherited by the end of his first term, the CBO predicts that deficits under his policies would exceed 4 percent of the overall economy over the next 10 years, a level White House budget director Peter Orszag acknowledged Friday would "not be sustainable."

The result, according to the CBO, would be an ever-expanding national debt that would exceed 82 percent of the overall economy by 2019 — double last year's level — and threaten the nation's financial stability.

"This clearly creates a scenario where the country's going to go bankrupt," said Sen. Judd Gregg, N.H., senior Republican on the Senate Budget Committee.

Orszag defended the president's agenda, noting that the forecast of bigger deficits and mounting debt is largely due to the CBO's view that the recession will be more severe and the recovery more tepid than the White House expects. Orszag said that long-term budget estimates are notoriously uncertain and that the CBO's projections leave open the possibility that the government could record a small surplus, rather than a $750 billion deficit, after five years.

The report could complicate efforts to win congressional approval of Obama's $3.6 trillion request for the fiscal year beginning Oct. 1.

By the numbers

2.8 percent

Average annual rate the White House projects the economy will grow over the next decade

2.5 percent

CBO's forecast

$1.4 trillion CBO's estimate of the 2010 budget gap

$1.2 trillion

White House estimate of next year's deficit

New debt figures cloud Obama agenda 03/20/09 [Last modified: Friday, March 20, 2009 11:24pm]
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