Deficit will near $2 trillion in 2009, federal budget expert predicts

A former staff member of the House and Senate Budget committees and a longtime observer of the federal budget process on Thursday said the 2008 record budget deficit of $455 billion likely will quadruple in 2009.

"These are unprecedented numbers in nominal terms. In political terms, it's rather astounding," said Stan Collender, during a briefing at the nonpartisan Center for Strategic and Budgetary Assessments. Collender is a managing director for Qorvis Communications and maintains a blog at www.capitalgainsandgames.com.

The self-described budget hawk said stimulus spending is critical to stabilizing the economy and he doubts there will be a serious attempt to deal with the deficit before 2011.

In the near term, agency budgets may get a boost to the extent federal programs are seen as creating or sustaining jobs. But the largess won't last, according to Collender.

"When the budget comes out, [President Obama] is not going to be able to simply project five years of increasing deficits," he said. "He's going to have to show the deficit coming down. This is Washington, and you can bet that the last budget before the next [presidential] election year will show the deficit being cut fairly substantially, which means it will be reflected in agency and department budgets."

But in the meantime, the $790 billion economic stimulus package is just the beginning of the spending blitz.

Collender expects Congress will quickly take up the nine appropriations bills that were not enacted as of Oct. 1, 2008 -- the beginning of fiscal 2009 -- but were instead included in a continuing resolution. The continuing resolution is set to expire in March, so lawmakers and the administration will have an opportunity to boost agency budgets before the end of the fiscal year.

Infrastructure spending that was cut from the stimulus package to garner enough political support from Senate Republicans is likely to be added to those appropriations bills instead, Collender said.

"You'll see education infrastructure added back during the appropriations phase," along with grants to state and local governments through agencies such as the Housing and Urban Development Department, he predicted.

It's a mistake to describe the economic stimulus package before Congress as the stimulus package, he said, adding, "It's a stimulus bill, and it's one of several stimulus efforts that will take place this year."

The Obama administration will get another bite at the apple this year with the fiscal 2010 budget. But once economic indicators suggest the economy is in recovery, deficit reduction will become a driving factor in future budgets, according to Collender.

"Think of the budget process as being a bit schizophrenic -- spend more now, tax less now, but be prepared to turn on a dime and bring the deficit down," he said.