CRISISBOOM

The grim forecast from the nonpartisan Congressional Budget Office came hours after President Obama called in his State of the Union address for Republicans and Democrats to work together to rein in record deficits that are pushing the national debt into uncharted territory. At $1.5 trillion, the deficit would equal 9.8 percent of the economy, the CBO said, making it one of the largest by that measure since the end of World War II.

Lawmakers scrambled on Wednesday to respond to the darkening budget picture, with Republicans pressing their call for sharp and immediate cuts in domestic spending. Twenty-one Senate Republicans, meanwhile, unveiled a plan to amend the Constitution to require balanced budgets, a top priority of the tea party movement.

Democrats resisted both initiatives, arguing that amending the Constitution, a lengthy process that requires a vote in all 50 state legislatures, would do little to address the current problem. They dismissed as “drastic” a proposal by House Republicans to slash $100 billion from the current budget, arguing that cuts of that magnitude would endanger a million jobs on public- and private-sector payrolls at a time when the unemployment rate already stands at 9.4 percent.

“We have to cut government, but Republicans are going at this with meat ax when what is needed is a Read more…