Deficit to dip below $1 trillion
BY BRIAN FALER, Bloomberg News
WASHINGTON -- The federal government will post an $845 billion deficit this year, the first time in five years the shortfall has dipped below $1 trillion, though the long-term budget outlook remains grim, according to the Congressional Budget Office.
Recent tax increases and spending cuts will help pare the deficit to its lowest level since 2008, the nonpartisan agency said in the first comprehensive analysis of the government's finances since last month's deal that averted, at least temporarily, the so-called fiscal cliff. Next year's projected shortfall will total $616 billion, the CBO said.
The deficit will begin climbing again in subsequent years as baby boomers swell the ranks of Medicare and Social Security. The government will rack up at least an additional $7 trillion in deficits over the next decade, which will push the publicly held debt up to $20 trillion by 2023, the CBO said.
"Deficits are projected to increase in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance and growing interest payments on federal debt," the report said.
The CBO also said it expects economic growth to be slow this year, with real gross domestic product growing by just 1.4 percent, in part because of budget-cutting in Washington. It predicted faster growth next year, with the economy expanding in 2014 by 3.4 percent. The jobless rate will remain above 7.4 percent through next year.