Plunging tax receipts, soaring spending and a sluggish recovery will push the US' deficits dramatically higher over the next decade, creating new complications for President Obama's domestic agenda. The deteriorating budget picture, detailed Tuesday in separate White House and congressional reports, comes just as Democrats and Republicans prepare to resume the battle over Democratic plans to spend $1 tn. overhauling the nation's health-care system. With economic output tipped to fall by almost 3% this year, the U.S. economy is facing tougher times.

The numbers- including a White House forecast of $9 tn. in additional debt over the next decade could affect Mr. Obama's efforts to increase spending in a host of areas, from education to foreign aid. Some budget experts also reiterated their belief that tax increases may need to hit families that the president has vowed to protect. The deficit projections, from the White House Office of Management and Budget and the nonpartisan Congressional Budget Office, came the same day the president renominated Federal Reserve Chairman Ben Bernanke. The deficit numbers complicate Mr. Bernanke's task in navigating the economy toward stability and recovery. Fed officials say the U.S. must show progress on deficit reduction by next year to avoid the possibility of a rise in interest rates, which might be needed otherwise to entice global investors to keep buying U.S.-government bonds. Big deficits could also weaken the dollar against foreign currencies. That could fuel inflation as the cost of imports rises in dollar terms. Measured against the size of the economy, the deficit will hit 11.2% of the gross domestic product, a level not seen since 1945, although it is an improvement from the $1.84 tn. forecast in May. Over the next decade, however, the White House forecast turned bleak. In effect, the White House economists acknowledged the recession will be far worse than they projected early this year. The deficit will improve only slightly in fiscal 2010, to $1.5 tn., worse than the $1.3 tn. forecast in May. And it will stay high, adding $9 tn. onto the federal debt through 2019. Borrowing alone will account for 40% of federal revenues in 2010.