CBO Updates Deficit Data -- Deficit still over 35% of Total Expenses

The Congressional Budget Office  this week updated the its estimates for the federal deficit for the current fiscal year and projected estimates for several years into the future.  The forecast is suspect, however, because it assumes that cost savings deals that resulted from the budget deficit limit negotiations will actually occur and that the Bush tax cuts will expires as required by current law.  They have already been extended once and will probably be extended again -- the last thing we want to do in a faltering economy is to raise taxes.


The forecast for this fiscal year shows minor changes.  The deficit will continue to be 35.7% of total expenditures -- thus, over one/third of the federal budget is funded by the issuance of debt.  The federal government  continues to spend 55.5% more that than it receives from taxes and other sources of revenue.


As reported in the Wall Street Journal, "CBO said that this year's deficit—at 8.5% of GDP—will be larger by that metric than all but two other years in the past 65, exceeded only by 2009 (10%) and 2010 (8.9%.) Spending, at 23.8% of GDP this year, is significantly higher than the historical averages. Revenues are significantly lower at 15.3% of GDP this year."