According to new estimates released January 26, the Congressional Budget Office (CBO) projects that the federal budget deficit will reach almost $1.5 trillion in fiscal year (FY) 2011, which ends September 30. In dollar terms, this would be the largest deficit in history, exceeding the FY 2010 deficit of $1.3 trillion and the FY 2009 deficit of $1.4 trillion. The projected budget deficit amounts to 9.8 percent of gross domestic product (GDP), slightly lower than the post-World War II high of 10.0 percent for 2009 but significantly higher than the 2.8-percent average for the prior 40 years.
Tax and stimulus legislation enacted over the past two years and slow economic growth will combine to keep revenues below historical levels and spending above historical levels in 2011. Revenues as a share of GDP are projected to be 14.8 percent, well below the historical average of 18 percent. Federal spending is projected to reach 24.7 percent of GDP in 2011, well above the historical average of 20.8 percent.