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CBO Outlines Projected FY 2012 Deficit, Future Impacts

The Congressional Budget Office said Wednesday that fiscal year 2012 will end with a federal budget deficit of about $1.1 trillion, or 7.3 percent of the gross domestic product.

CBO added it believes unemployment will stay at more than 8 percent for the rest of the fiscal year, with the rate projected to reach 9 percent during the second half of 2013.

If current laws stay the same, CBO predicts the deficit will shrink to $641 billion but the GDP will decline by a half percent.

That decline would be considered a recession, the office said.

Future policies CBO singled out as having the largest effects on the budget include a ruling on the reductions in Medicare payment rates and enforcement of the Budget Control Act of 2011.

Impacts also include laws set to expire such as the 2001 and 2003 tax cuts, unemployment insurance reauthorization, emergency unemployment benefits and a Social Security payroll tax holiday.

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