Projection of total deficits over the next decade after the recent deficit-reduction deal between President Obama and Congress were sharply reduced by the Congressional Budget Office.
The Budget Office, however, warned that the extension of Bush-era tax rates and other policies would more than offset those savings.
The report from the nonpartisan budget office underscores the high stakes for a special 12-member Congressional committee created to figure out by December how to achieve up to $1.5 trillion of the $2.4 trillion in maximum 10-year savings promised by the deal.
It comes as Mr. Obama and Democrats, like many economists, are calling for a mix of larger long-term deficit reduction measures with immediate additional job creation measures. While the latter would add to deficits in the short term, proponents argue that they would prevent another recession and avoid the associated costs in lost revenues and safety-net spending. But Republicans oppose any stimulus measures or long-term increases in tax revenues.
Douglas Elmendorf, director of the budget office, wrote on its Web site that such projections “understate the budgetary challenges facing the federal government in the coming years.”