Archive for February 26th, 2009

*Deficit for FY2009 would represent 12.3 percent of GDP
*Obama vows to slash deficit to $533 billion by 2013
*Cost of Iraqi, Afghan wars seen at $140 billion in 2009

By Caren Bohan and Jeff Mason

WASHINGTON, Feb 26 (Reuters) – President Barack Obama will forecast the biggest U.S. deficit since World War Two in a budget that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy’s freefall.

An eye-popping $1.75 trillion deficit for the 2009 fiscal year is projected in Obama’s first budget, according to U.S. officials who briefed reporters on the numbers.

That is equal to 12.3 percent of U.S. gross domestic product — the largest share since 1945 when the country ran a shortfall of 21.5 percent of GDP.

Obama will unveil the budget at 11 a.m. EST (1600 GMT). It provides the broad outlines of a more detailed document to be released in April.

The soaring deficit figure sent U.S. Treasury bond prices lower and yields up to three week highs on Thursday.

Gold prices slid to their lowest level in more than a week, after testing all time highs over $1,000 an ounce earlier this month. Spot gold fell to $941.20 an ounce, the lowest since February 17. Stock futures rose.

The budget, for the fiscal year that begins on Oct. 1, 2009, requires passage by Congress to take effect.

While Obama, a Democrat, has broad support with both chambers in Congress controlled by his party, he could face a fight as the sticker shock of huge deficits lead to wariness about more spending for goals such as the healthcare overhaul.

FEDERAL SPENDING SOARING Read the rest of this entry »

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Feb 26, 9:16 AM (ET)

By MARTIN CRUTSINGER

WASHINGTON (AP) – President Barack Obama is sending Congress a budget that would boost taxes on the wealthy and curtail Medicare payments to insurance companies and hospitals to make way for a $634 billion down payment on universal health care.

Obama’s first budget predicts the deficit for this year will soar to a whopping $1.75 trillion, according to administration officials who spoke on condition of anonymity before the public unveiling of the budget Thursday.

As part of the effort to end the nation’s financial crisis, the administration will propose boosting the budget deficit by an additional $250 billion this year – to the record $1.75 trillion – enough to support as much as $750 billion more in spending under the government’s rescue program for financial institutions. That would more than double the $700 billion bailout effort passed by Congress last October.

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