The $2.1 trillion in spending cuts passed by Congress in 2011 won’t curb the growth of entitlements that poses a fiscal-crisis risk in the next 25 years, the Congressional Budget Office said in an annual report on long- term budget projections.
The head of the Congressional Budget Office gave a bipartisan conference committee three choices for cutting the U.S. deficit: increase taxes, make deep cuts in entitlement spending or cut other programs.
The U.S. budget deficit is projected to be $1.3 trillion in the year ending Sept. 30, down from $1.4 trillion forecast in April, because of curbs on federal spending and increased income-tax collections, the Congressional Budget Office said.
A permanent extension of Bush-era tax cuts would provide a temporary boost to the U.S. economy and then become a drag on growth by pushing up interest rates, the head of the nonpartisan Congressional Budget Office said.
The sudden slowdown in U.S. inflation has left Treasuries at the cheapest levels in almost two years, aiding the Federal Reserve’s efforts to tamp down long-term borrowing costs while the economy improves.