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CBO: Fourth Straight Year of Trillion-Dollar Deficits, Unemployment Will Stay Above 8 Percent for Remainder of 2012

The U.S. Capitol building is seen Saturday, Nov. 19, 2011, in Washington. The six Democrats and six Republicans on the Supercommittee, as it's familiarly called, have until next Wednesday, Nov. 23, to come together on a deficit reduction plan. Otherwise Congress faces a stark alternative: allow payroll tax cuts and jobless aid for millions to expire or extend them and increase the nation's $15 trillion debt by at least $160 billion. (AP Photo/Carolyn Kaster)

For "fiscal year 2012 (which ends on September 30), the federal budget deficit will total $1.1 trillion," The Congressional Budget Office said in a statement on Wednesday.

You know what this means, right? This means this will be the fourth year in a row the feds have posted a trillion-dollar deficit, as The Washington Times notes.

“The key issue facing policy makers is not whether to reduce budget deficits,” said CBO director Douglas W. Elmendorf. “The question is when. The question is how.”

But wait! There’s more: The CBO also predicts unemployment will stay above eight percent for the remainder of 2012. Wait -- really? That's odd. We seem to remember someone telling us back in 2009 that the  stimulus bill would have unemployment at six percent by 2012. Huh.

Anyway, there are two slightly positive pieces of news in the report. First, the CBO expects that the economy will grow a little:

CBO expects the economic recovery to continue at a modest pace for the remainder of calendar year 2012, with real (inflation-adjusted) GDP growing at an annual rate of about 2¼ percent in the second half of the year, compared with a rate of about 1¾ percent in the first half.

Second, that $1.1 trillion forecast is actually lower than the original estimate. The new number is "down slightly from the $1.2 trillion deficit that CBO projected in March," according to the report.

So, yeah: Basically the “good news” is “Hey! It could’ve been worse,” which, the more we think about it, makes us feel worse.

The CBO also notes that if Congress doesn’t figure out a way to address the impending “fiscal cliff” (budget cuts and the expiration of the Bush-era tax cuts), the U.S. will enter a double-dip recession and unemployment will jump to nine percent.

However, “if Congress were to extend the tax cuts and cancel spending cuts, CBO projects the economy will only grow at 1.7 percent in 2013, and unemployment will still hit 8.7 percent at some point, and average 8 percent for the year,” The Washington Times reports, adding that if Congress allows the tax cuts to expire and spending cuts to take effect, "the debt will have dropped to 59 percent of GDP in a decade."

"But if Congress continues to push off that pain, it would mean an additional $8 trillion in debt over the next 10 years, reaching 89 percent of GDP in 2022,” the report adds.

Follow Becket Adams (@BecketAdams) on Twitter

Front page photo source courtesy the AP.

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