CBO issues bleak long-term budget outlook

The Congressional Budget Office is again warning that the government's mounting debt problems threaten to swamp the economy unless policymakers move to arrest out-of-control deficits.

The national debt would balloon to almost equal the size of the economy after a decade and would swell to twice the size of the economy in 25 years, the CBO says, assuming existing tax and spending policies stay in place.

An alternative would be to have Bush-era tax cuts expire and let a wave of automatic spending cuts simultaneously hit the economy in January, which the CBO says would toss the economy back into a brief recession.

But while shocking the economy in the short term, the steps would have long-run benefits in shrinking the national debt when measured against the economy.