CBO: Deficits to average $1 trillion this decade

The CBO expects the economy to grow at about 4.4 percent annually during the last half of this decade, while the administration expects annual growth to range from 5.3 percent to 4.3 percent from 2015 to 2020.

The CBO's prediction for this year's deficit -- $1.5 trillion -- is 56 billion less than the White House estimate largely because it expects less federal spending.

The deficit for this year is on pace to top last year's record budget shortfall of $1.4 trillion, according to another CBO report.

The larger deficit so far is due almost entirely to a drop in tax revenue.

Spending by the government is about the same as last year, but tax receipts dropped from $861 billion to $796 billion.

The budget office said Thursday the deficit for the first five months of the fiscal year, which starts in October, was $655 billion, an 11 percent increase over the same period in the last fiscal year.

Individual tax receipts dropped by $53 billion, mostly because of lower wages and the middle-class Making Work Pay tax credit in the stimulus championed by the Obama administration.

Corporate tax revenues fell by $11 billion because of lower profits and a tax break in the stimulus that allowed companies to use current losses to offset taxes on past year's profits. 

The government spent $1.45 trillion through February, the same amount it spent last year over the same period.

Spending on unemployment benefits nearly doubled, rising from $36 billion in the first part of 2009 to $69 billion this year, while defense and entitlement costs saw smaller increases.

But the extra costs was offset by a sharp drop in bailout spending. The government has spent just $9 billion under the bank bailout, officially known as the Troubled Asset Relief Program, compared to $113 billion spent last year.

The $1.56 trillion deficit expected by the White House would be a record shortfall in nominal dollars.

It would be equivalent to nearly 11 percent of the country's economy, the highest level since the post-World War II era.

The White House budget predicts the deficit will fall to roughly 4 percent of the economy over the next decade as the economy recovers, federal spending on stimulus and bailouts end and Bush-era income tax cuts expire.

President Barack ObamaBarack ObamaWashington Post: Trump is a 'unique and present danger' Obama reaffirms support for Germany in wake of shooting GOP Sen. Flake offers Trump rare praise MORE has created a bipartisan commission of lawmakers and outside experts to chart a path toward a more reasonable fiscal budget. Democratic congressional leaders have pledged to hold votes on the commission's recommendations after the mid-term elections.

Republicans said the more dour CBO estimates show Obama's policies to be more unsustainable than expected.

“The news today from CBO is clear: the President’s budget will continue to lead our nation into a fiscal catastrophe – an even worse one than the President’s own numbers suggest," said Rep. Paul RyanPaul RyanClinton maps out first 100 days Why a bill about catfish will show whether Ryan's serious about regulatory reform Trump is right about one thing MORE (Wis.), the ranking Republican on the House Budget Committee.

Senate Republicans said Obama's expected savings from healthcare reform would be "wiped out" if CBO's deficit estimates are correct. The healthcare legislation favored by the president would save about $1.1 trillion over the next two decades, according to the White House and CBO studies.

"It won’t even make up for the additional $1.2 [trillion] that the CBO found that the President missed in his budget projections in just the next 10 years," said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnellMitch McConnellClinton maps out first 100 days Why a bill about catfish will show whether Ryan's serious about regulatory reform Trump is right about one thing MORE (R-Ky.).