President Obama's budget proposal estimates a deficit of $1.6 trillion for the current fiscal year and $1.3 trillion in 2011.
The forecast for the next decade is somewhat worse than it was a year ago, mostly because of a revised economic outlook. From 2011 to 2020, a total deficit of $8.5 trillion is expect
Even that may be an understatement. In the last 30 years, about 80 percent of four-year deficit forecasts have been too optimistic.
The early Clinton budgets — which failed to predict the surpluses that were generated, in part, by a stock market bubble — are the only major exception
In contrast, just two years ago, the Bush administration projected a surplus by 2012.
Today, with a better understanding of the severity of the economic downturn, the deficit situation is much more dire.
Budget forecasts require assumptions about both policy and the economy, and both can turn out to be spectacularly wrong.
In 2008, for example, the unemployment rate in 2012 was assumed to be 4.8 percent. The most recent assumption is 8.2 percent.