Good news/bad news time. Good news: The deficit will fall this year, thanks to additional tax revenue and major cuts in government spending. Bad news: It's still going to be $1.1 trillion, according to the Congressional Budget Office estimate released today; last year's total was $1.3 trillion. If the figure is accurate, 2012 will be the fourth year in a row that the government has run at least a trillion dollars short, Bloomberg reports.
The CBO is assuming that GDP will grow 2%, but that unemployment will climb to 8.9% from 8.5%. "The federal budget deficit—although starting to shrink—remains very large by historical standards," the report said. How fast it declines will depend in part on the speed of the economic recovery. "Probably more critical, though, will be the fiscal policy choices made by lawmakers," as they face the expiration of the Bush tax cuts and $1 trillion in scheduled automatic spending cuts. (Read more Congressional Budget Office stories.)