Budget Deficit Down Slightly, Still Hits $1.35 Trillion

The 2010 U.S. budget gap is a projected $1.35 trillion, down slightly from last year's $1.4 trillion deficit that set a post-World War II record.

In its annual report, the Congressional Budget Office called the budget outlook "bleak."

CBO chief Douglas Elmendorf said the economic recovery will be slow, predicting public debt will make up a huge share of the overall economy and remain a constant threat to growth for the foreseeable future, The Washington Times reported.

"It is true that as we push [publicly held debt] in this country to 60 percent of GDP at the end of this [fiscal] year and beyond that over the next few years, we're moving into territory that most developed countries stay out of," Elmendorf told the House budget panel. "That raises the risk" of seriously adverse economic consequences "every step that we go."

The nonpartisan CBO also predicted that because of the lingering recession, unemployment won't drop to five percent -- from the current high of about 10 percent -- for another five years.