CBO’s latest numbers are a grim epitaph for the outgoing Administration, and they stand in stark contrast to the budget it inherited. When it took office in 2001, the Bush Administration stepped into the largest surpluses in history. The Bush Administration proceeded to convert $5.6 trillion in projected surpluses into over $4 trillion in projected deficits. CBO now estimates for 2009 an unprecedented deficit of $1.2 trillion. President Bush will soon leave office, but the billions of debt he leaves behind will last long after him. They will take a generation of sustained effort to overcome.

Today’s 2009 estimate – and the estimates for subsequent years – actually understate prospective deficits. That’s because CBO projections must assume that current law remains unchanged. So, today’s estimates do not include a full accounting of further costs in Iraq and Afghanistan or the revenue impact of renewing the Bush Administration’s tax cuts, and passing more that they propose.

Today’s estimates also do not include the cost of the economic recovery package to address the grave economic situation that the Bush Administration is leaving for the Obama Administration and the Congress to address.

The deficits facing us are daunting, without the cost of a recovery plan, and they beg the question: should we make the deficit worse by trying to make the economy better? This recession has all the indicia of being the longest and deepest since the Great Depression. We cannot let the economy get away from us. Our number one objective has to be economic recovery. Our economic situation is so severe that stabilizing the economy has to take precedence over near-term deficits.
According to CBO, the economy will contract by 2.2% in 2009, if we do nothing to spur it on, and GDP will run an average of 6.8% below potential over the next two years. If we can close some of that performance gap, we can diminish the deficit. In any event, as we design economic recovery legislation, we will try to minimize the impact on the budget over the long term. Yesterday, President-elect Obama stated his commitment to dual goals: economic recovery in the short term, and over the long term, a budget on track.   I share this commitment and look forward to working with the Obama Administration toward these goals.

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