Obama’s budget plans will shorten recession: Experts


Washington : The bipartisan US Congressional Budget Office Friday said the ambitious reform projects of President Barack Obama combined with the huge federal stimulus programme would produce larger budget deficits than Obama has projected.

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But it also said it expected the recession to end by autumn, the Wall Street Journal reported.

Revenues would fall short by about $1 trillion a year from 2010 to 2019, almost double what Obama’s budget director had projected, the report said.

In the current 2009 fiscal year, the CBO projected a deficit of $1.8 trillion, up from $1.2 trillion estimated two months ago.

Obama is pushing for Congress to pass his budget proposal of $3.55 trillion for fiscal year 2010, which begins in September and which CBO says will produce a $1.4 trillion-deficit.

The figure represents more than 13 percent of Gross Domestic Product. The deficit is not expected to fall below 4 percent of GDP by 2019.

Obama’s budget director Peter Orszag said the differences between his and the CBO projections stemmed from different technical and economic assumptions, mainly in the later budget years.

He noted as an example the 900-billion-dollar plus-or-minus confidence level in one of the year’s projections.

White House spokesman Robert Gibbs said Obama was committed to his goal of cutting in half the annual deficit within four years.

On a positive note, the CBO revised its economic projections, saying it expected the recession to end by autumn with the input of the $787-billion stimulus plan passed in February by Congress and measures by the Treasury and Federal Reserve to stabilise financial markets, the Journal reported.

Federal Reserve chief Ben Bernanke Friday was optimistic about the market’s responses to a series of crisis measures undertaken by the central bank to stem the financial crisis. Over last weekend, he said the recession could end this year if the banking and financial systems can be stabilised.