Budget deficit to top $1T

WASHINGTON

— An annual congressional report says the U.S. budget deficit is likely to burst through the symbolic $1 trillion barrier this year despite a healthy economy.

Tuesday's Congressional Budget Office report follows a burst of new spending last year and the repeal in December of several taxes used to help finance the Affordable Care Act. Those have combined to deepen the government's deficit spiral well on into the future, with trilliondollar deficits likely becoming the norm.

The CBO estimates a $1 trillion deficit for the ongoing fiscal year, which would bring the red ink above $1 trillion for the first time since 2012, when former President Barack Obama capped four consecutive years of $1 trillion-plus budget deficits. The government, slated to spend $4.6 trillion this year, would have to borrow 22 cents of every dollar it spends.

Economists say the most relevant way to look at the deficit is to measure it against the size of the economy, with deficits at 3% or so of gross domestic product seen as sustainable. The latest report shows deficits averaging 4.8% of GDP over the course of the coming decade.

Obama's deficits came as the U.S. economy recovered from the deep recession of 2007-2009. The return of trilliondollar deficit now comes as the economy is humming on all cylinders, with the CBO predicting that the jobless rate nationwide will average below 4% through at least 2022. The growth rate is predicted to hit 2.2% this year.

“The economy's performance makes the large and growing deficit all the more noteworthy,” CBO Director Phillip Swagel said. “Changes in fiscal policy must be made to address the budget situation, because our debt is growing on an unsustainable path.”