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CBO: Debt crisis looms absent major policy changes

CBO: Debt crisis looms absent major policy changes

POSTED: Wednesday, June 22, 2011 - 12:29pm

UPDATED: Wednesday, June 22, 2011 - 12:54pm

A new report says that the national debt is on pace to equal the annual size of the economy within a decade, levels that could provoke a European-style debt crisis unless policymakers in Washington can slam the brakes on spiraling deficits.

The Congressional Budget Office study offers a fresh reminder of what's at stake in ongoing talks led by Vice President Joe Biden that are aimed at cutting more than $2 trillion from the federal deficit over the coming decade as the price for permitting the government to take on more debt to pay current obligations.

CBO says the debt increases the probability of a fiscal crisis in which investors lose faith in U.S. bonds and force policymakers to make drastic spending cuts or tax hikes.

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