Next president faces swelling U.S. debt
The budget deficit doubled in the past year, escalating the finger-pointing in Congress.
The US is about to end this fiscal year with a $407 billion budget deficit that is more than double what it was in 2007 – and the red ink is projected to flow on.Skip to next paragraph
Subscribe Today to the Monitor
Even before the full cost of the government takeover of Fannie Mae and Freddie Mac is calculated, the Congressional Budget Office (CBO) projects that the nation will add more than $2.3 trillion to the national debt over the next 10 years.
This updated CBO report, released Tuesday, is the latest sign that the next president will face tough fiscal choices early on in a new administration. But it's already prompted even tougher rhetoric in Congress – and on the campaign trail – over who is to blame for all the red ink.
"This Democratic Congress really does deserve the name "Do Debt, Do Deficit, and Do Nothing," said Sen. Judd Gregg (R) of New Hampshire, the ranking Republican on the Senate Budget Committee in a briefing after the release of the CBO update.
With the new fiscal year set to begin on Oct. 1, Congress has yet to pass a single appropriations bill, he said. "So essentially the business of operating the government from day-to-day has been abdicated by the Democratic leadership," he added.
Sen. Kent Conrad (D) of North Dakota, who chairs the Senate Budget Committee, shot back: "[Republicans] are the architects of the economic fiasco that has brought us to where we are at this moment," he said.
"Under their watch and under their control, we have a housing crisis, an energy crisis, a health care crisis, and a fiscal crisis," Mr. Conrad said. "This is a combination of mismanagement that will take years to undo."
What's driving deficits is "an unusual amount of turbulence" in the US economy this year, including depressed housing markets, fragile financial markets, and soaring prices for energy and food, along with the cost of war, according to the CBO. But the biggest long-term threat is rising health care costs and the retirement of the "baby boom" generation.
"As we have said over and over in the past, the nation is on an unsustainable long-term fiscal course driven primarily by rising health care costs," said CBO director Peter Orszag at a briefing on Tuesday. "And that does need to be addressed before a crisis hits,"
One of the first decisions a new president will have to make is whether or not to extend President Bush's tax cuts, now set to expire in 2010.