CBO reports another $1 trillion deficit

The government faces a fourth year of trillion-plus deficits in 2012, according to new projections released Tuesday—numbers which also show little relief in the future unless Washington comes to grips with needed changes in its tax and spending policies.

Like Aunt Cassandra coming down from the attic, the Congressional Budget Office steps squarely into the 2012 campaign season with the 147-page report which might have been subtitled “It’s not just the economy stupid, it’s also the debt.”

The $1.079 trillion deficit now projected for this fiscal year ending Sept. 30 is a step backwards from what CBO had predicted in August. And to punch home its message, the non-partisan agency outlines an especially grim scenario in which Congress not only extends all the current Bush-era tax cuts but pulls the plug on the $1.2 trillion in sequester set in motion by the Budget Control Act last summer.

Under this scenario—which can’t be ruled out politically—deficits would stubbornly hover just under $1 trillion through 2017, adding another $4.7 trillion altogether to the mounting federal debt.

Under the more prudent—and many would say unrealistic— scenario of ending tax breaks and implementing cuts, the cumulative deficits would be $1.72 trillion or $3 trillion less from 2013-2017. But even this path comes with a warning from CBO: that debt service costs are already on the rise and will command an ever greater share of the annual budget.

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