$2.3 Trillion in New Debt Expected by 2014; Economic Growth Will Not Ease Strain on U.S., Budget Office Director Warns
This year's federal budget deficit will reach a record $422 billion, and the government is now expected to accumulate $2.3 trillion in new debt over the next 10 years, the Congressional Budget Office reported yesterday.</br></br>The expected deficit for the current fiscal year, which ends Sept. 30, is $56 billion less than the CBO predicted in March, as a recovering economy added to tax receipts. But it is $46 billion more than last year's record shortfall, with even more red ink possible, the nonpartisan agency reported: The expected total 10-year deficit would climb from $2.3 trillion to $3.6 trillion if President Bush is able to extend the tax cuts he enacted. They are currently set to expire in 2011.</br></br>"This is a fiscal situation in which we cannot rely on economic growth to cause deficits to disappear," warned CBO Director Douglas Holtz-Eakin, a former economist for the Bush White House. "The budgetary outlook will be dictated by policy choices."</br></br>About half of the projected 10-year deficit is based on an assumption that conflicts in Iraq and Afghanistan will continue. The CBO policy requires that deficit projections be based on current conditions.</br></br>The budget office expects that the total federal debt held by the public -- the amount borrowed through the sale of Treasury bonds to finance overspending -- will balloon 58 percent over the next decade, from $4.3 trillion this year to nearly $6.8 trillion in 2014.