National Debt Expected To Swell Under Obama Budget Plan
The Congressional Budget Office (CBO) recently released a "preliminary analysis of the President's budget", and the outlook is not pretty.
The CBO reviewed the "A New Era of Responsibility: Renewing America's Promise" proposal that was released by President Obama and his team in February, and just recently released their preliminary findings.
The CBO estimated that the "cumulative deficit from 2010 to 2019 under the President's proposals would total $9.3 trillion dollars", and that the debt held by the public would rise to 82% of GDP by 2019.
The CBO estimates that the total national debt will be $17.27 trillion dollars by 2019 under the proposed Obama budget, while the GDP will be just under $21 trillion dollars.
As it stands right now, the current national debt of the United States is just over $11 trillion dollars. This number is rapidly increasing due to the intense effort to reflate the economy.
The CBO estimates that the deficit will come in at around $1.85 trillion dollars in 2009.
This number is expected to drop to $1.38 trillion in 2010, and then fall further to $970 billion dollars in 2011.
Looking further into the future, the CBO anticipates trillion dollar plus deficits in 2018 ($1.02 trillion dollars) and 2019 ($1.19 trillion dollars).
The smallest deficit, according to the CBO's findings, would come in 2012, when the US government is expected to post a deficit of $672 billion dollars.
The United States government currently spends hundreds of billions of dollars per year to service their debt, and this number would obviously continue to spike with the addition of trillions of dollars more in debt.
The Congressional Budget Office, however, does see economic growth returning to the United States in 2010.
They estimate that Real GDP growth will be 4.1% in both 2010 and 2011.
They also estimate that the unemployment rate will peak at 9.4% in late 2009 / early 2010, before falling after that. The CBO forecasts an average unemployment rate of 5.6% between the years of 2012-2015, and 4.8% from 2016-2019.
Inflation is also expected to remain extremely low, based on the CBO's findings.
The good news? According to the CBO, economic growth (and lower unemployment rates) should soon be returning to the United States.
The bad news? Based on President Obama's budget plan, the United States will have an absolutely crushing debt load by 2019.
Here is a link to the recently released CBO report:
Source: A Preliminary Analysis of the President's Budget and an Update of CBO's Budget and Economic Outlook
Filed under: General Market News