Thread: Obama to hike 10-year deficit to $9 trillion

By Jeff Mason

WASHINGTON (Reuters) - The Obama administration will raise its 10-year budget deficit projection to roughly $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

"The new forecasts are based on new data that reflect how severe the economic downturn was in the late fall of last year and the winter of this year," said the official, who is familiar with the plans.

"Our budget projections are now in line with the spring and summer projections that the Congressional Budget Office put out."

The CBO said in June that deficits between 2010 and 2019 would total $9.1 trillion. The official said the 2010-2019 cumulative deficit projection replaces the administration's previous estimate of $7.108 trillion.

The record-breaking deficits have raised concerns about U.S. ability to finance that debt and whether the United States can maintain its top-tier AAA credit rating.

The United States relies on large foreign buyers such as China and Japan to cheaply finance its debt, and they may demand higher interest rates if they begin to doubt that the government can control its deficits

The White House budget office is also expected to lower its deficit forecast next week for the current fiscal year to $1.58 trillion from $1.84 trillion after removing $250 billion set aside for bank bailouts.

(Editing by John O'Callaghan)

http://www.reuters.com/article/newsOne/ ... XE20090821

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