The US budget deficit will jump to a record level this year, congressional analysts said, highlighting the deterioration in America’s fiscal outlook in the wake of the tax compromise enacted last month.
A day after President Barack Obama pledged to “make sure we aren’t buried under a mountain of debt”, the Congressional Budget Office offered a grim picture of both the short and long-term fiscal challenges facing the US, even as the economic recovery kicks into higher gear and the unemployment rate drops gradually.
The CBO said that the budget shortfall in the 2011 fiscal year would reach $1,480bn – the largest level on record – up from $1,294bn last year and $1,410bn in 2009. As a share of the US economy, this year’s projected fiscal gap of 9.8 per cent of gross domestic product would be the second-highest since the second world war, up from 8.9 per cent in 2010 and close to the 10 per cent post-war peak in 2009.