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CBO: Recent federal deficits largest since 1946

The non-partisan Congressional Budget Office released its report on the long-term budget outlook for the federal government on Tuesday. While some left-leaning commentators have been celebrating recent reductions in the national deficit — reductions that are due almost entirely to record tax collections — the CBO offers a gloomy portrait of long-term U.S. fiscal health.

(Source: Congressional Budget Office)

(Source: Congressional Budget Office)

From the report: “Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing federal debt to soar. Federal debt held by the public is now about 73 percent of the economy’s annual output, or gross domestic product (GDP). That percentage is higher than at any point in U.S. history except a brief period around World War II, and it is twice the percentage at the end of 2007. If current laws generally remained in place, federal debt held by the public would decline slightly relative to GDP over the next several years, CBO projects. After that, however, growing deficits would ultimately push debt back above its current high level. CBO projects that federal debt held by the public would reach 100 percent of GDP in 2038, 25 years from now, even without accounting for the harmful effects that growing debt would have on the economy (see the figure below). Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”

Read the entire report here. 

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