CBO: Long-term budget outlook still ‘daunting’

While an increase in tax revenues has lowered the deficit slightly more than previously thought, the long-term budget outlook “remains daunting,” the Congressional Budget Office (CBO) said Thursday.

{mosads}CBO now projects that the government will be $158 billion in the red in 2007, $19 billion less than predicted in March. The agency named additional revenues, mostly from individual income taxes, as the reason for the more positive picture. However, despite the short-term improvement, CBO predicts that, in 2009 and 2010, the deficit will rise again to a greater share of the gross domestic product.

“Over the long term, the budget remains on an unsustainable path,” CBO said. “Unless changes are made to current policies, growing demand for resources caused by rising healthcare costs and the nation’s expanding elderly population will put increasing pressure on the budget.”

House Majority Leader Steny Hoyer (D-Md.) said the latest CBO report “reaffirms that Republican policies have created deficits as far as the eye can see.”

The agency issued its gloomy forecast despite also predicting that the real growth of the economy will average 2.7 percent between 2009 and 2017.