Deficits to decrease - but not for long

Federal deficits are expected to fall over the next few years but then start to climb, pushing the nation's accumulated debt to levels not seen since just after World War II, according to new estimates from the Congressional Budget Office released Tuesday.

A big driver of the deficits in the next decade is a series of costly tax and spending decisions that Congress is expected to make.

Those include making the Bush-era tax cuts permanent before they expire at the end of this year; permanently adjusting the Alternative Minimum Tax for inflation to protect the middle class from having to pay it; and permanently preventing a pay cut for Medicare doctors.

Another going assumption: Congress will not let $1.2 trillion in spending cuts mandated under law to take effect starting in 2013.

Under this so-called "alternative fiscal scenario," the CBO notes, deficits would average 5.4% of gross domestic product between 2013 and 2022. In the absence of those policy decisions -- that is, if lawmakers just adhered to current law -- the average would be just 1.5%.



Source: Jeanne Sahadi @CNNMoney