New CBO data project reduced deficits, sluggish growth

Washington National Tax Services

The Congressional Budget Office (CBO) has released updated economic and budget projections for federal fiscal years 2012-2021, incorporating the recently enacted Budget Control Act of 2011. As a result of that legislation, the 10-year cumulative deficit is estimated to decline by $2.1 trillion to $3.5 trillion. Annual deficits under CBO's "baseline" would decline below 2 percent of gross domestic product (GDP) by 2014 and stay low through the remainder of the 10-year period. However, alternative projections assuming different policies -- including failure to adhere to the spending caps in the Budget Control Act and extension of expiring individual income tax relief -- would result in significant deficits throughout the 10-year period.

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