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U.S. 2040 deficit to nearly double as percent of economy -CBO

WASHINGTON (Reuters) – The U.S. budget deficit will more than double as a share of economic output by 2040 if current tax and spending laws remain unchanged, the Congressional Budget Office said on Tuesday.

The CBO, releasing its annual long-term budget outlook, said however, that overall U.S. debt levels in 2040 will be slightly lower than estimates made a year ago for 2039 because of expectations of lower long-term interest rates.

CBO said the 2040 deficit will reach 5.9 percent of gross domestic product, compared to 2.7 percent this year and 3.8 percent in 2025 based on its normal scoring methods. By contrast, the deficit reached nearly 10 percent of GDP in 2009 during the depths of the recent financial crisis.

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