Congressional experts pegged the 2010 U.S. budget deficit at $1.35 trillion, a slight improvement from the $1.38 trillion estimate in August, but the overall picture of the government’s finances remains bleak, according to the annual report released Tuesday.
The Congressional Budget Office said the government will run an aggregate deficit of almost $6 trillion during the next decade, a level that many economists worry is unsustainable in the long run, and could lead to a currency shock, inflation, crippling interest rates or other economic maladies.
The CBO estimate is almost certainly an understatement of the long-term problem. President Barack Obama and many lawmakers in both parties plan to extend many of the Bush-era tax cuts that are set to expire at year end. Officials also want to continue providing relief to taxpayers from the alternative-minimum tax, another break that’s costly to the government’s finances. Those tax policies—if enacted later this year—would add several trillion more to the deficits that aren’t counted under CBO’s system.
The CBO also is assuming that annual spending rises with inflation, while Congress in recent years—even before the recent recession—has been boosting spending at higher rates.