The report notes that debt held by the public will reach 73 percent of the economy this year, ?the highest level since 1950 and about twice the 36 percent of GDP that it measured at the end of 2007.? [The Hill]
Under the current-law baseline, the deficit next year would shrink to $641 billion.
This assumes that a series of policies known as the fiscal cliff take place. They include automatic spending cuts triggered by the August 2011 deal to raise the debt ceiling; expiration of the Bush-era tax rates; a sharp cut in Medicare doctor payments; and the failure to index the Alternative Minimum Tax for inflation, which would raise taxes for many households.
The $641 billion budget deficit estimate is larger than the $585 billion deficit CBO had projected in January.
[...] Democrats last month threatened to let the nation go over the fiscal cliff unless Republicans agree to a ?balanced? deficit package that includes some tax increases. The GOP has so far doubled down on its insistence that a deficit solution include only cuts to non-defense social spending.
Next stop, a “deep recession,” according to today’s report.