The United States government is set to rack up some big deficits over the next decade, although not quite as expensive as previously indicated. Economic growth is expected to proceed at a modest pace, but the unemployment picture in this country will continue to drag the economy for a few more years.
The Congressional Budget Office (CBO) drew these conclusions in its recent update to its 10-year budget and economic outlook. “The United States continues to face profound budgetary and economic challenges,” CBO director Douglas Elmendorf noted in his blog.
The U. S. is on track to accrue a $1.3 trillion deficit this year. This will make it the third straight year the country has built up a $1 trillion plus deficit. This years deficit will be the third largest shortfall in the past 65 years. Over the next decade, the United States government is set to total up a projected $8.5 trillion in new debt, with annual deficits to average 4.3% of gross national product(GDP). This years deficit will be twice that coming in at 8.5% of GDP.
It is also projected that by year 2021, the debt held by the public will reach 82% of the size of the economy. This will mark the highest since 1948.
This year Congress passed the 2011 budget calling for modest spending cuts and a deal was reached in August calling for a larger debt-reduction over the next decade.
“About two-thirds of that reduction stems from the effects of enacting the Budget Control Act, which set caps on future discretionary spending and created a process for adopting additional deficit reduction measures,” CBO director Doug Elmendorf said in his blog post.
The Congressional Budget Office’s 10 year estimates are based on the assumption that the current U.S. government policies will continue and not expire as they are scheduled to under current law.