After months of continuing gloom and discord, Congress and President Obama are starting to make a dent in the federal budget deficit, which is projected to shrink slightly to $1.28 trillion this year.
Bigger savings from this month's debt-ceiling deal are forecast over the next decade.
No one is celebrating. There will be plenty of red ink for years to come.
The nonpartisan Congressional Budget Office projected Wednesday that annual budget deficits will be reduced by a total of $3.3 trillion over the next decade, largely because of the deficit-reduction package passed by Congress earlier this month as part of the deal to raise the federal debt ceiling.
The office also forecast persistently high unemployment, a troubling political prospect for Obama in his campaign to win a second term.
Even with the anticipated big savings, annual budget deficits are expected to total nearly $3.5 trillion over the next decade -- and much more if Bush-era tax cuts scheduled to expire at the end of next year are extended. Nearly $8.5 trillion would be added to the national debt over the next 10 years if the tax cuts and certain spending programs are kept in place, the budget office report said.
The national debt now stands at more than $14.6 trillion.
The numbers help illustrate the pressure on a new joint committee in Congress that is charged with finding an additional $1.2 trillion to $1.5 trillion in budget savings over the next decade. Some lawmakers are calling for an even bigger package, a tall order given the bitter debate that produced this month's debt deal.
Most of the improvement in this year's deficit picture comes from higher-than-anticipated tax collections from 2010 returns filed in the spring. Over the longer term, the belt-tightening required in the new deficit-reduction law will mean even bigger savings, the report says.