WASHINGTON (Reuters) - President Barack Obama’s budget plans would rack up $9.8 trillion more debt by 2020, or $1.2 trillion more than the White House has forecast, the Congressional Budget Office said on Friday.
Republicans seized on the estimate to fault Obama, saying his plans would raise U.S. government debt to an “alarming” 90 percent of the economy.
Obama pledged when he unveiled his budget for fiscal 2011 in early February to cut the annual deficit in half by the end of his first term.
However, he has faced criticism from Republicans for proposing to raise taxes on wealthy Americans and not doing enough to rein in spending.
On February 18, he named a bipartisan panel to tackle the exploding U.S. deficits and promised to give it broad leeway to recommend ways to put the U.S. fiscal house in order.
CBO said it would publish its full analysis of Obama’s budget plan later this month.
But working with staff of the congressional Joint Committee on Taxation, it made a preliminary estimate that Obama’s proposals would boost the budget deficit in fiscal 2010 to $1.5 trillion, or 10.3 percent of U.S. gross domestic product.
“Measured relative to the size of the economy, the deficit under the President’s proposals would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter,” CBO said.
CBO said its 2010 budget deficit estimate was $56 billion less than the administration’s figure. But that good news for the White House was overshadowed by CBO’s longer forecast.
“Largely because it projects lower baseline revenues in future years, CBO estimates deficits that are $75 billion higher for 2011 and $1.2 trillion greater over the 2011-2020 period than what the administration anticipates under the President’s budget,” CBO said.
“Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020,” CBO said.
Republicans on the House of Representatives Budget Committee issued a statement highlighting the mammoth debt numbers, as well as CBO estimates that showed a record $3.8 trillion in spending in fiscal 2011 and tax increases of $1.8 trillion through 2020.
“Interest on the debt becomes one of the largest spending categories in the federal budget, and would more than quadruple in the next 10 years, rising from $209 billion this year to $916 billion in 2020,” the Republicans said.
Obama, a Democrat, says he inherited a financial mess from his Republican predecessor President George W. Bush and had to step up government spending immediately after taking office to fight the worst U.S. recession in decades.
Reporting by Doug Palmer; editing by Anthony Boadle