The CBO forecast on the economy describes the dilemma lawmakers face. Their successful measures to avoid a recession have left in place an expected dangerous rise in the national debt.
America won't go into recession this year, but the economy is threatened in the longer term by rising federal debt. That's what the Congressional Budget Office concludes in its latest annual forecast on the economy and the federal budget.
The CBO, the government's fiscal scorekeeper, described a rock-and-a-hard-place dilemma for policymakers Tuesday as they seek to promote growth while containing the deficit.
On the one hand, it said the "fiscal tightening" in some recently enacted tax hikes and federal spending cuts could cut economic growth in half this year. The action by Congress to avoid the so-called fiscal cliff did avert a recession. But unless lawmakers make additional changes, the CBO forecasts that gross domestic product (GDP) will grow by just 1.4 percent for the year, compared with a no-tightening scenario of 2.9 percent growth.
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