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OMB Updates Administration's Economic Forecast

The Office of Management and Budget has released the Mid-Session Review, updating the Administration's economic forecast. The report shows a smaller 2009 deficit but larger out-year deficits than previously projected. The expectation is for a $262 billion improvement in the projected 2009 deficit, now projected to be $1.58 trillion, or 11.2% of GDP.

Certain spending programs, such as unemployment insurance and food stamps are expected to increase and, at the same time, revenues are expected to decline. Assuming the Waxman-Markey bill passes, the White House forecast assumes there will be at least $600 billion in revenue over the next decade from polluters. They will have to buy credits under new climate change rules contained in the bill.

The OMB report sets public debt at more than 61% of the GDP by the end of next year. That would be the highest since 1952. And debt could reach 68% by the end of 2019.