New report issues warning on deficits, fiscal cliff

For the fourth straight year, the Congressional Budget Office is predicting deficits topping $1 trillion. According to the CBO report, the projection is down slightly but at “7.3 percent of gross domestic product (GDP), this year’s deficit will be three-quarters as large as the deficit in 2009 when measured relative to the size of the economy. Federal debt held by the public will reach 73 percent of GDP by the end of this fiscal year—the highest level since 1950 and about twice the share that it measured at the end of 2007, before the financial crisis and recent recession.”

The CBO also warned that if Congress and the White House does not reach an agreement to avoid the fiscal cliff coming at the end of the year, it is likely that the economy will slip back into recession.

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