Mid-Session Review Blues

By Elizabeth Newell

Today OMB released the mid-session budget review, which updates the administration's economic forecast and budget projections. The update significantly increases projections for future deficits. The Office of Management and Budget now predicts the deficit for fiscal 2010 will exceed $1.5 trillion rather than the $1.3 trillion previously projected. Deficits are expected to average more than $800 billion a year through 2019.

On his blog, OMB Director Peter Orszag said additional steps will, of course, be necessary for the administration to reduce out-year deficits and he promised that the administration would "have more to say about all that" in the fiscal 2011 budget. Among those steps, he said, will be a continued effort to reduce spending and reform government contracting.

A major overhaul of federal contracting practices would clearly save the government - and taxpayers - money, but even if the administration hits their target of saving $40 billion a year through contracting reform, that's only a fraction of the $917 billion annual gap between revenue and spending the administration is now projecting.