WASHINGTON- The White House and U.S. Congress will issue separate budget estimates on Tuesday that could slow President Barack Obama's domestic policy proposals as he faces increased skepticism among lawmakers.

The reports by the White House budget office and the nonpartisan Congressional Budget Office are expected to show the government will spend a record $1.6 trillion more than it collects this year and nearly double its outstanding debt over the next 10 years.

The grim fiscal picture could provide further fodder to opponents of Obama's nearly $1 trillion healthcare overhaul, including fiscally conservative members of his own Democratic party, who say the nation must get its existing healthcare and retirement programs under control before extending them.

The numbers are scary, said Austin Smythe, Republican staff director of the House Budget Committee.

Many of those numbers are already known.

The White House has confirmed that its deficit estimate for the 2009 fiscal year, which ends September 30, will fall to $1.58 trillion after eliminating around $250 billion that was set aside for bank rescues.

Budget experts in Congress expect the CBO to provide a similar estimate.

Republicans, the minority party in Congress, dismiss the reduction as a gimmick because the money was meant as a placeholder in case a second bank rescue program was needed.

This is spin, and nothing more. The lower estimate is strictly the result of the administration massaging their budget assumptions, former CBO director Douglas Holtz-Eakin wrote in a memo to House Republican Leader John Boehner.

HIGHER PROJECTION

The White House says its 10-year budget deficit projection will jump from $7.1 trillion to roughly $9 trillion, putting it in line with a previous CBO estimate.

Other figures in the reports could differ because the CBO bases its projections on an assumption that current policies will continue unchanged -- for example, that tax cuts enacted in 2001 and 2003 expire as scheduled in the next few years.

The White House budget assumes that Obama's goals, such as keeping some of those tax cuts in place, will become law.

Obama has promised to halve the deficit by the end of his four-year term, a task that will be made easier when tax revenues increase along with a recovering economy.

One-time recession-battling efforts, like the $787 billion stimulus bill passed in February and the bank rescue package, presumably will not be needed in coming years.

But the government's rock-bottom borrowing costs could go up as well when the economy improves and investors demand a higher rate of return. The government's retirement and healthcare expenses also are expected to explode over the coming decade as millions of Baby Boomers retire.
With congressional elections looming next year, Obama will be pressed to show he is serious about cutting costs.

Many economists think that it is unlikely the government can curtail spending, which means taxes would have to rise.

(Editing by Paul Simao)

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