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CBO: Deficit to Go Up $4T Under Fiscal Cliff Tax Deal

budgetUnder current law as it stands, the Congressional Budget Office is estimating the tax deal passed by Congress to avert the fiscal cliff will add $3.9 trillion to the deficit over the next decade, The Hill newspaper reports.

Peter Schroeder writes $3.6 trillion of that figure results from lower rates for the vast majority of U.S. taxpayers and an adjustment to the Alternative Minimum Tax.

Schroeder writes the remainder comes from business and energy tax extenders, extending unemployment benefits and adjusting fees for doctors when treating patients covered under Medicare.

Spending will increase nearly $330 billion over the next 10 years under that budget agreement, according to the report.

According to Politico, CBO’s analysis assumes the 2001 and 2003 tax cuts would expire on New Year’s Day and did not factor in how the deal raises rates for Americans making more than $400,000 in annual income.

CBO previously warned the fiscal cliff of tax increases and spending cuts could trigger another recession, Politico reports.

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