Estimates of the October budget gap in the Bloomberg survey of 29 economists ranged from $129 billion to $110 billion.
Absent the automatic spending cuts and most of the tax increases currently set to take effect next year, the deficit would grow to $1.04 trillion in fiscal year 2013, the fifth consecutive year of budget gaps exceeding $1 trillion, according to the CBO. The budget deficit was $1.09 trillion in fiscal 2012, the fourth-largest since World War II.
Obama, who plans to reduce the shortfalls by increasing taxes for top earners, is holding meetings with labor and business leaders in the White House this week. The talks are intended to shore up the support for his plan before Nov. 16 discussions with Republican House Majority Leader John Boehner, Senate Minority Leader Mitch McConnell, Democrat House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid.
While Obama said Nov. 6 elections showed voters back his proposal, Boehner cited public support for the re-elected House Republican majority and said that tax rates must not go up. Both sides have left room for a compromise that would curtail tax breaks to pay for preserving current rates.
The deficits add to national debt, which will most likely hit the $16.4 trillion limit at the end of December, with extraordinary measures enabling the U.S. to meet its obligations “until early in 2013,” the Treasury Department said on Oct. 31.
“There’s a question of whether the debt ceiling is going to be wrapped up into the fiscal cliff discussions or not,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before today’s Treasury release. “If it’s not, then we’re going to have to have a whole another round of negotiations very early next year to get the debt limit increased.”