CBO Forecasts Massive Deficits
In its annual report — The Budget and Economic Outlook — released January 7, 2009, the Congressional Budget Office (CBO) notes that:
“The sharp downturn in housing markets across the country, which undermined the solvency of major financial institutions and se
verely disrupted the functioning of financial markets, has led the United States into a recession that will probably be the longest and the deepest since World War II. The Congressional Budget Office anticipates that the recession—which began about a year ago—will last well into 2009.”
In response to this situation, the Bush Administration and the Obama Administration have taken unprecedented measures to stabilize the financial system and stimulate the economy. These actions will produce enormous budget deficits for fiscal years 2009 and 2010 and perhaps beyond.
This chart illustrates the magnitude and components of the 2009 deficit.