WASHINGTON: A new assessment of President Barack Obama's budget released Friday said the White House underestimates future budget deficits by more than $2 trillion over the upcoming decade. The estimate from the nonpartisan Congressional Budget Office said that if Obama's February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years – an average of almost $1 trillion a year. Obama's budget saw deficits totaling $7.2 trillion over the same period. The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections. Friday's report actually predicts the deficit for the current budget year, which ends Sept. 30, won't be as bad as the $1.6 trillion predicted by the administration and will instead register $200 billion less. But 10 years from now, CBO sees a $1.2 trillion deficit that's almost $400 billion above White House projections. The White House's goal is to reach a point where the budget is balanced except for interest payments on the $14 trillion national debt. Such “primary balance” occurs when the deficit is about 3 percent of the size of the economy, and economists say deficits of that magnitude are generally sustainable. But CBO predicts that the deficit never gets below 4 percent of gross domestic product. That means that by the time 2021 arrives, the portion of the debt held by investors and foreign countries will reach a dangerously high 87 percent. And, as a result, interest costs for the government would explode from $214 billion this year to almost $1 trillion by decade's end. But the agency also rejects the administration's claims of more than $300 billion of that savings – to pay for preventing a cut in Medicare payments to doctors – because it doesn't specify where it would come from.
