CBO releases new deficit estimates

CBO releases new deficit estimates

The Congressional Budget Office (CBO) expects the federal deficit for FY2010 to be over $1.3 trillion. The actual deficit for FY2009 was $1.4 trillion. Testifying before the House Budget Committee this week, CBO Director Douglas W. Elmendorf, stated that the FY2010 deficit will be up slightly because increases in spending for the economic stimulus program, health care, and social security will more than offset decreases in spending to support the financial sector. He told the committee that if there are no changes in current laws and policies (CBO’s “baseline” estimate), the deficit will average about $600 billion between 2011 and 2020. Elmendorf cautioned that these outyear estimates may understate the deficit. This is because CBO figures assume that current tax cuts and temporary provisions restricting the effect of the Alternative Minimum Tax (AMT) are not extended and government spending only increases with inflation.

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