Washington — The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today’s bleak landscape.
The administration’s annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama’s budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.
The release of the update — usually scheduled for mid-July — has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town Aug. 7 on its summer recess.
The administration earlier this year predicted that unemployment would peak at about 9 percent without a big stimulus package and 8 percent with one. Congress did pass a $787 billion two-year stimulus measure, yet unemployment soared to 9.5 percent in June and appears headed for double digits.
Obama’s current forecast anticipates 3.2 percent growth next year, then 4 percent or higher growth from 2011 to 2013. Private forecasts are less optimistic, especially for next year.
Any downward revision in growth or revenue projections would mean that budget deficits would be far higher than the administration is now suggesting.
Setting the stage for bleaker projections, Vice President Joe Biden recently conceded, “We misread how bad the economy was” in January. Obama modified that by suggesting the White House had “incomplete” information.
The new budget update comes as the public and members of Congress are becoming increasingly anxious about Obama’s economic policies.
A Washington Post-ABC News survey released Monday found support eroding on how Obama is dealing with other issues that are important to Americans right now — the economy, unemployment and the swelling budget deficit.
The Democratic-controlled Congress is reeling from last week’s testimony by the head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, that the main health care proposals Congress is considering would not reduce costs — as Obama has insisted — but “significantly expand” the federal financial responsibility for health care.
Citing the CBO testimony, House Minority Leader John Boehner, R-Ohio, on Monday accused Democrats of “burying this budget update until after Congress leaves town next month.” He called the budget-update postponement “an attempt to hide a record-breaking deficit as Democratic leaders break arms to rush through a government takeover of health care.”
White House budget office spokesman Tom Gavin disagreed, noting the delay was “really not something out of the norm” and is typical for a president’s first year. Gavin noted that President George W. Bush’s budget office did not release the mid-session review in his first year until August 22; in President Bill Clinton’s first year, it did not come out until Sept. 1.
Obama also didn’t release his full budget until early May — instead of the first week in February, when he put out just an outline.
The nation’s debt — the total of accumulated annual budget deficits — now stands at $11.6 trillion. In the scheme of things, that’s more important than talking about the “deficit,” which only looks at a one-year slice of bookkeeping and totally ignores previous indebtedness that is still outstanding.
Even so, the administration has projected that the annual deficit for the current budget year will hit $1.84 trillion, four times the size of last year’s deficit of $455 billion.
Standard & Poor’s chief economist David Wyss, like many other economists, says he expects the recession to last at least until September or October. “We’re looking for basically a zero second half (of 2009). And then sluggish recovery,” he said.
Even as it prepares to put larger deficit and smaller growth figures into its official forecast, the administration is looking for signs of improvement.
“If we were at the brink of catastrophe at the beginning of the year, we have walked some substantial distance back from the abyss,” said Lawrence Summers, Obama’s chief economic adviser.