US deficit underestimated by $1.2 trillion, CBO report claims

9 March 2010

US President Barack Obama’s budget proposals would leave the US $1.2 trillion more out of pocket during the next decade than predicted, a new report has claimed.

A study by the Congressional Budget Office (CBO) revealed that budget plans would result in a total deficit of $9.8 trillion over the period.

CBO also forecasts a deficit of $1.43 trillion for 2011, a figure $75 billion higher than the projected sum.

Paul Ryan of Wisconsin, a Republican on the House Budget Committee, was quoted by Bloomberg as saying: “The news today from CBO is clear: The president’s budget will continue to lead our nation into a fiscal catastrophe - an ever worse one than the president’s own numbers suggest.”

Further findings from the CBO’s study revealed that government deficits would total $1.5 trillion in 2010 and $1.3 trillion in 2011, 10.3 per cent and 8.9 per cent of gross domestic product respectively.

The US’s deficit would account for 5.6 per cent of GDP by 2020 if the president’s proposals receive the go ahead.

By Jim Ottewill

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