As Obama calls for short-term fix to avert sequester, CBO reports falling deficits

By Lori Montgomery and Zachary A. Goldfarb, WashPost, Published: February 5

President Obama on Tuesday urged Congress to head off deep automatic spending cuts set to hit the Pentagon and other federal agencies on March 1 and replace them, at least for a few months, with a new debt-reduction package that includes fresh tax revenue.

As Obama spoke, the nonpartisan Congressional Budget Office rolled out new projections showing that the spending battles of the past two years have helped shrink record budget deficits but have also hampered economic growth.

The deficit — the annual gap between taxes and spending — is projected to fall to $845 billion this year, the first time it has come in under $1 trillion since 2008.

The improvement in the 2013 deficit is due in large part to tax increases adopted Jan. 1 and to the automatic spending cuts, known as the “sequester.” Together, the CBO said, those policies are expected to shave about 1.25 percentage points off economic growth this year and to cost the nation about 1.5 million jobs.

(More here.)