Deficit estimate: Up to $1.85 trillion
Lawmakers' budget agency evaluates the revenue and spending effects of the president's budget proposals.
NEW YORK (CNNMoney.com) -- The U.S. budget deficit in 2009 is projected to spike to between $1.67 trillion and $1.85 trillion, according to estimates released Friday by the Congressional Budget Office.
Much will depend on the extent to which President Obama's budget proposals are enacted by Congress.
"CBO's estimates of the deficits under the president's budget are higher each year than those estimated by the administration -- by $93 billion for 2009 and by about $2.3 trillion for the 2010-2019 period," the report said.
The main reason for those differences: CBO uses a different starting point -- or baseline -- than the White House to measure changes in revenue or spending as a result of the president's proposals.
An annual deficit between $1.67 trillion and $1.85 trillion would mark a record in dollar terms and the highest as a share of gross domestic product since World War II. It would represent between 11.9% and 13.1% of GDP.
The enormous leap in the annual deficit -- it was $459 billion in 2008 -- is primarily due to the effects of the financial and economic crises and the government's response to them.
In February, the White House Office of Management and Budget estimated that this year's deficit would hit $1.75 trillion, or $100 billion less than the CBO.
House and Senate budget committees are expected to release their budget resolutions sometime next week. That will be the first time lawmakers, who are obligated to use CBO estimates, will show their hand on what they want the budget to be for next year. It is also one of the early steps in the budget negotiations that will take place over the next several months.
"The reality is we are going to have to make adjustments to the president's budget if we want to keep the deficit on a downward trajectory," said Senate Budget Chairman Kent Conrad, D-N.D., in a statement following the CBO report.
But Conrad said the budget will ultimately still reflect many of the key priorities that Obama has set out: Fostering clean energy and better education, reforming health care and significantly trimming the deficit over the next five years.
The top Republican on that committee, Sen. Judd Gregg, R-N.H., struck a different note, signaling where the crux and tenor of the budget debate will lie.
"According to CBO, the president's budget would double publicly held debt in five years and nearly triple it in ten years," Gregg said. "I strongly urge the Democratic majority to show the fiscal restraint needed to control spending, maintain a fair tax policy and cut the deficit, so that we can head off the avalanche of debt that is poised to crush the economy."
Peter Orszag, the president's budget director, noted in a conference call Friday that "there's a huge amount of uncertainty surrounding budget projections." Even a small difference in outlook, he said, can have a big effect on deficit estimates over a number of years.
The CBO, for instance, assumes the economy will grow an average of 2.3% a year between 2016 and 2019, whereas the White House assumes a 2.6% growth rate.
Like Conrad, Orszag said he is confident that the budget Congress produces will reflect the president's top priorities, especially health care.
"I don't think there's any direct impact on the desire for or the ability to get health care reform done this year," he said. And, he added, "I'm confident what comes out of the committees will lead to a fiscally responsible path."