Over the coming decade, the deficit would total $7 trillion but would move higher if lawmakers extend expiring business tax breaks and rescue doctors from cuts to their reimbursements under Medicare.
The report provided fresh fodder for Washington's familiar battles over the budget, deficits and debt. Obama inherited an economy in crisis and first-ever deficits exceeding $1 trillion. The 2009 deficit, swelled by the costs of the Wall St. bailout, hit a record $1.4 trillion, while the deficits of 2010 and 2011 both registered $1.3 trillion.
Economists say that too-high deficits and debt are a drag on the economy and could eventually precipitate a fiscal crisis like many European countries are experiencing.
"The CBO's report is yet another warning that we need to get spending under control. The deficit is still unsustainable," said House Budget Committee Chairman Paul Ryan, R-Wis. "By 2023, our national debt will hit $26 trillion. We can't let that happen. We need to budget responsibly, so we can keep our commitments and expand opportunity."Ryan promises his upcoming budget plan will balance by 2023, but that would require spending cuts of almost $1 trillion in that year alone. The economy will grow slowly in 2013 and more rapidly next year, with unemployment projected to stay high, according to the report. This year's growth is being hampered by a tax increase enacted in January and by automatic spending cuts scheduled to take effect this spring. CBO projects the economy will grow by just 1.4 percent this year but recover to 3.4 percent next year. Unemployment is projected to stay above 7.5 percent through next year. That would be the sixth straight year above that level, the longest period of such high unemployment in 70 years, the report said. Without the government's fiscal tightening, which includes the expiration of Obama's two-year, 2 percentage point cut in payroll taxes and the imposition of the automatic spending cuts, economic growth would be about 1.5 percentage points higher this year, the report said. However, CBO warns that future growth would be constrained if the government doesn't reduce future deficits.