CBO: 'Profound' Challenges Ahead

The picture for 2011 is a glum one—a $1.3 trillion deficit, 9.1% unemployment rate—and it's not going to get much brighter in the next few years, according to a report by the Congressional Budget Office. In it, notes Politico, the CBO warns of "profound budgetary and economic challenges" and growth "well below the economy’s potential." Unemployment won't dip below 8% until 2014, it predicts.

The deficit should drop from 8.5% of the GDP this year to 3.2% in 2013, close to its 2.8% average over the past 40 years, the report notes. But those numbers are dependent on a number of what USA Today calls "unlikely" things coming to pass, including an end to the Bush tax cuts, the predicted supercommittee cuts, and a cut in Medicare physician payments. (More budget deficit stories.)