President Obama has announced his 2011 budget proposal. When FY 2010 ends on September 30 the deficit will total to $1.6 trillion, much higher than the Congressional Budget Office’s forecast.

The Bush tax cuts will expire at the end of this year and if Obama extends their term, the federal deficit estimates will be even higher. Brian Reidl estimates the national debt to count for 98 percent of the GDP by FY 2020, higher than last week CBO’s forecast of 67 percent.

Next year’s budget totals $3.83 trillion, and the Obama administration describes it as “a budget that helps middle class families.” Chris Edwards explains that the 2011 budget will be “$1.1 trillion more than the federal budget nine years ago had promised. That’s a 41 percent forecasting error.” Will this kind of forecasting error keep happening?

The government has become too big and taken too many actions beyond its core responsibilities. To effectively control spending, legislative changes to current budget rules will need to be made.

One useful step would be for the federal government to give states more freedom to find innovative and cost-effective ways to solve problems. One of the “laboratories of democracy” could certainly come up with something better than our existing Medicaid program, for example. So if there is a silver lining in the projected deficits, it is that dramatic reform may be inevitable.