Reporting from Washington — Federal deficit spending will rise to $1.5 trillion this year, according to a report released Wednesday.
Federal deficit spending will rise to $1.5 trillion this year, according to a report released Wednesday.
The report comes on the heels of President Obama's State of the Union address and in the midst of a burgeoning debate in Washington over federal budget cuts and spending, a front-line argument between Obama and congressional Republicans.
The report from the Congressional Budget Office said federal debt over the next decade will continue to balloon to unsustainable levels unless federal tax and spending policies change.
The report also projects only a modest decrease in the nation's unemployment rate, a key metric politically as the president faces a reelection campaign. By the fourth quarter of 2011, the CBO projects unemployment will drop from 9.4% to 9.2%. By the fourth quarter of 2012, when Obama seeks reelection, the unemployment rate will dip to 8.2%.
When President Reagan sought reelection in 1984, the unemployment rate hovered in the 7% range.
On the budget deficit, the report says the current recovery should mitigate the disparity between spending and revenue, but that the tax compromise Obama and Republicans agreed to in the lame duck session last month inhibited further deficit reduction.
By 2014, the deficit could be just a third of what it is today, but only if policies like the tax cut extensions agreed to last month are allowed to expire as scheduled.
The report warns that the nation's debt, as a share of its gross domestic product, could nearly double from 40% in 2009 to 77% by 2021, without changes in policy.
Lawmakers will soon face a showdown on spending when Congress must vote to approve raising the limit on the nation's debt.
Republicans voted on Tuesday, before Obama's speech, to revert federal spending to 2008 levels. They say they will accept an increase in the debt limit only if further cuts are made.
"A few years ago, reducing spending was important. Today, it's imperative," Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, said in the GOP's official response to Obama's speech. "Instead of restoring the fundamentals of economic growth, [Obama] engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt."
Democrats slammed the GOP's move Tuesday as a "budgetless resolution."
"I want Republicans to take the deficit seriously -- to join President Obama and Democrats in making the hard choices it will take to get out of debt. But so far, with the opportunity to finally back up their words, they've given our country a record of disappointment," Rep. Steny Hoyer (D-Md.), the minority whip, said in a statement.
Michael A. Memoli contributed to this report