CBO Sees $407 Billion Deficit in Fiscal 2008

The Congressional Budget Office yesterday forecast a $407 billion deficit for fiscal 2008, vastly larger than the $161 billion shortage in the prior fiscal year.

The deficit will peak at $438 billion in 2009, dipping to $431 billion in 2010 before declining to $325 billion in 2011 and $126 billion in 2012, according to the CBO, if current laws and policies remain in place.

The U.S. can expect “at least several more months of very slow growth,” the CBO predicted, noting that while it is “still uncertain” whether this period will be designated a recession, the unemployment rate and pace of economic growth are similar to past recessions.

Going forward, the CBO said, health care costs as well as the effects of a growing elderly population will play a huge role in the budget, as will the depressed housing market, weak financial markets, and elevated oil and food prices.

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