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The US government's budget deficit is expected to narrow slightly to $1.35 trillion in 2010 but its fiscal outlook remains bleak amid mounting debt, estimates by the US Congress showed Tuesday.
Accumulating deficits beyond this year could double federal debt held by the public to $15 trillion within a decade, the Congressional Budget Office (CBO) said in a report.
The warning came as President Barack Obama moves to unveil a partial spending freeze in his State of the Union address on Wednesday.
The CBO, an independent non-partisan agency that provides economic data to lawmakers, said the budget gap for the 2010 fiscal year ending September would be "slightly smaller" than the record $1.41 trillion chalked up in 2009.
Last year's deficit was the largest since the end of World War II and as a share of GDP, the basic measure of a country's overall economic output.
But the CBO cautioned that if legislation were enacted in the next several months that either boosted spending or reduced revenues, the 2010 deficit could equal or exceed last year’s shortfall.
It said the federal fiscal outlook beyond this year was "daunting," citing projected deficits averaging about $600 billion per year over the 2011-2020 period even as they were expected to fall.
The accumulating deficits could double federal debt held by the public to $15 trillion or 67 percent of GDP by the end of 2020, it said.
At the end of 2009, debt held by the public was $7.5 trillion or 53 percent of GDP.
"With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket," the CBO said.
The US government closed its 2009 fiscal year with a record $1.41 trillion budget deficit as it poured resources into the economy to contain a serious financial crisis that plunged the nation into recession.
The White House in October had forecast an even bigger gap of $1.50 trillion in fiscal 2010.
Obama on Wednesday will call for a three-year partial freeze on spending that would save $250 billion over a decade, in a bid to show he is serious about cutting the huge deficit, officials said.
Obama will unveil the plan to cap discretionary non-security government spending in his State of the Union address, a showpiece event shaping up as a chance to recast his presidency amid a fierce political storm.
But the Republican party seized on the latest deficit estimates to attack the the Democrats and the Obama administration.
"These numbers are just staggering, and it appears that the sky is the limit for this tax-spend-and borrow Democratic majority," said Republican Senator Judd Gregg, a ranking member of the Senate Budget Committee.
"Despite all of the dire news about our mountain of debt, the spending spree continues, and only lip service is being paid to the issue of debt reduction," he charged.
On Saturday, Obama offered support for a bipartisan attempt in Congress to create a fiscal task force intended to tackle the burgeoning deficit.
The bill would establish an 18-member task force of 10 Democrats and 8 Republicans with bipartisan co-chairs and seek to examine all aspects of the financial condition of the US government.
