A new estimate predicts the federal budget deficit will hit almost $1.5 trillion this year, a new record.
The latest figures from the CBO are up from previous estimates because Congress and President Barack Obama teamed up in December on bipartisan legislation to extend Bush-era tax cuts that were due to expire. The new estimates will only add fuel to a raging debate over cutting spending and looming legislation that's required to allow the government to borrow more money.
The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year.
Legislation passed in December to extend tax cuts, unemployment benefits for the long-term jobless and provide a 2 percent payroll tax cut this year adds almost $400 billion to this year's deficit.
In his speech Tuesday night, Mr. Obama proposed a five-year freeze on nondefense spending that he said would reduce the deficit by more than $400 billion over the next decade. Mr. Obama proposed greater investment in infrastructure and technology, and also touted last year's health care reform legislation as a way to combat excessive spending.
In theto the State of the Union, Rep. Paul Ryan said federal spending cuts are the only way to tackle the deficit, and blasted Obama's plans for the federal budget.
"Whether sold as 'stimulus' or repackaged as 'investment,' (Democrats') actions show they want a federal government that controls too much; taxes too much; and spends too much in order to do too much," Ryan said. "And during the last two years, that is exactly what we have gotten - along with record deficits and debt - to the point where the President is now urging Congress to increase the debt limit."