Under current laws, the federal budget deficit will drop below $1 trillion for the first time under President Barack Obama, according to a report released by the Congressional Budget Office on Tuesday.
The CBO predicted that the budget deficit will shrink to $845 billion in fiscal 2013, reflecting 5.3 percent of GDP. The deficit would be the smallest since 2008.
The non-partisan agency said deficits are expected to continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015.
However, the CBO said deficits are projected to move back to the upside later in the coming decade, reaching almost 4 percent of GDP in 2023.
The projected increase in deficits reflects 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.
"As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade," the CBO said.
The agency predicted that debt would equal 77 percent of GDP by 2023 and remain on an upward path if current laws remain in place.
With regard to the economy, the CBO said it expects GDP to increase by just 1.4 percent this year due in part to the automatic spending cuts currently due to go into effect on March 1st.
Lawmakers are attempting to hammer out an agreement to avert the automatic spending cuts, but familiar disagreements over taxes and entitlement reform seem to preventing much progress.
President Barack Obama recently proposed enacting a small package of spending cuts and tax reforms in order to delay the automatic spending cuts for a few months.
by RTT Staff Writer
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