WASHINGTON — The sluggish economy and continued high expenses for the wars in Iraq and Afghanistan could push the deficit to $438 billion next year, the Congressional Budget Office said today.
The CBO predicted that for the fiscal year ending Sept. 30, the deficit will be $407 billion. At the end of the last fiscal year, the deficit was $161 billion. Next year's projections do not include costs associated with injecting additional capital into mortgage buyers Fannie Mae and Freddie Mac.
CBO's projections differ from those made by the Office of Management and Budget, which in July projected a $389 billion deficit for this year and a $482 billion deficit for next year.
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The CBO said that the "unusual amount of turbulence" in the economy is placing additional pressure on the government and causing additional expenditures.
"Whether this period will ultimately be designated a recession or not is still uncertain, but the increase in the unemployment rate and pace of economic growth are similar to conditions during previous periods of mild recession," the agency wrote in a report sent to Congress today.
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