An annual congressional report says the US budget deficit is likely to burst through the symbolic $1 trillion barrier this year despite a healthy economy, the AP reports. Tuesday's Congressional Budget Office report follows a burst of new spending last year and the repeal in December of several taxes used to help finance the Affordable Care Act. Those have combined to deepen the government's deficit spiral well on into the future, with trillion-dollar deficits likely for as far as the eye can see. The annual CBO update of the government's economic and fiscal health estimates a $1 trillion deficit for the ongoing fiscal year, which would bring the red ink above $1 trillion for the first time since 2012, when former President Obama capped four consecutive years of $1 trillion-plus budget deficits.
The government, slated to spend $4.6 trillion this year, would have to borrow 22 cents of every dollar it spends. Most economists say the best way to look at the deficit is to measure it against the size of the economy, with deficits at 3% or so of gross domestic product seen as sustainable. The latest report shows deficits averaging 4.8% of GDP over the course of the coming decade. "As a result of those deficits, federal debt would rise each year, reaching a percentage of the nation's output that is unprecedented in US history," the CBO report says. Obama's deficits came as the US economy recovered from the deep recession of 2007-2009. The return of trillion-dollar deficit now comes as the economy is humming on all cylinders.
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