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Deficit To Be $1.1 Trillion, Unemployment To Stay Above 8 Percent, CBO Says

Aug 22, 2012

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Expect to hear about this from the campaign of Republican presidential contender Mitt Romney as he continues to take aim at President Obama's record on the budget and the economy:

The Congressional Budget Office reports this morning that "for fiscal year 2012 (which ends on September 30), the federal budget deficit will total $1.1 trillion ... marking the fourth year in a row with a deficit of more than $1 trillion."

Also, the nonpartisan analysis arm of Congress predicts, "the unemployment rate will stay above 8 percent for the rest of the year."

It adds, though, that economic growth should pick up slightly over the rest of the year:

"CBO expects the economic recovery to continue at a modest pace for the remainder of calendar year 2012, with real (inflation-adjusted) GDP growing at an annual rate of about 2 percent in the second half of the year, compared with a rate of about 1 percent in the first half."

And the $1.1 trillion forecast for the deficit is "down slightly from the $1.2 trillion deficit that CBO projected in March."

CBO also underscores what many economists are warning: that if lawmakers let the federal government go over the so-called fiscal cliff at the end of the year — deep budget cuts combined with the expiration of all the "Bush tax cuts" — the economy will slide into what "will probably be considered a recession" in 2013. The jobless rate, CBO says, would rise to about 9 percent.

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