Declining Deficit

The federal deficit peaked at 10.1% of GDP in 2009, and fell to 6.94% of GDP by 2012. The CBO projects that it will fall to $845 billion or 5.3% this year. And, if no policy changes are made, the deficit will fall to 2.4% of GDP by 2015, a decline of 4.54 percentage points. Problem is, that rapid a reduction in the deficit has traditionally resulted in a recession.

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