New York – White House budget director Peter Orszag said the 2010 federal deficit will be little changed from 2009’s record $1.42 trillion, and he pledged to reduce the amount of red ink without endangering the economy.

“Deficits of this size are serious and ultimately unsustainable,” Orszag said in a speech Tuesday at New York University. He said next year’s revenue shortfall is projected to “be about the same size,” with $9 trillion in deficits over 10 years, averaging about 5 percent of the economy.

A swollen budget shortfall, compounded by fragile financial markets, is pressuring President Barack Obama to slash the deficit in the budget he will propose to Congress in February to prevent it from becoming an issue in the 2010 congressional elections.

Orszag didn’t spell out details of how the administration plans to rein in spending when the fiscal 2011 budget is presented to Congress in February.

The record deficit for the government’s spending year ended Sept. 30 was more than triple the $455 billion from a year earlier as the deepest recession since the 1930s crippled tax revenue and the administration increased spending to rescue the economy.

Orszag said $3.5 trillion committed to stabilizing the economy, including unemployment benefits, extra food stamps and a $787 billion stimulus program, is helping the economy regain its footing.

“The sense of crisis in our financial markets seems to have passed,” he said.

Prolonged borrowing by the government, he said, may ultimately drive up U.S. interest rates, discourage investment and force the Treasury to borrow more money from foreign governments or investors.

At some point, he said, “we are likely to observe a rise in interest rates, an increase in borrowing from abroad, or some combination thereof due to the deficits,” Orszag said.

Orszag said the administration is concerned about the lagging effects of the rising jobless rate, which hit 9.8 percent in September. The government is scheduled to release October figures Nov. 6.

The evidence so far “suggests that the recession hits young people particularly hard, knocking them off course for years to come,” he said.