CBO now projects the 2011 deficit to reach a record-breaking $1.5 trillion, and increased its deficit projections over the 2011-2020 period by $1.4 trillion. The 2010 tax cut package and a weakening of economic forecasts account for most of the deterioration in budget projections. CBO's baseline makes it all the more imperative to enact a fiscal plan now to deal with our mounting federal debt.
While CBO's debt projections have improved under the Extended-Baseline scenario, debt has worsened under the Alternative Fiscal Scenario. But under either path, debt reaches unsustainable levels. CRFB argues that policymakers should act immediately to put in place a credible plan to stabilize the debt gradually as the economy recovers.