The U.S. budget outlook is “daunting,” with deficits stuck at levels not seen since World War II, congressional forecasters said yesterday in a report that lays out the challenge facing President Barack Obama as he seeks to boost the economy while cutting spending.

Obama, struggling in opinion polls, is expected to propose a three-year freeze on many domestic spending programs — a measure that would make only a small dent — and outline other measures to try to tame record budget deficits in his State of the Union speech today.

Obama could find skeptics among his fellow Democrats in Congress, who aim to bring down the nation’s 10 percent unemployment rate through additional spending before the November congressional elections.


The nonpartisan Congressional Budget Office said the deficit for the current fiscal year would come in at $1.35 trillion, slightly lower than the record $1.4 trillion posted in the previous fiscal year, which ended last September.

At 9.2 percent of gross domestic product, this year’s deficit still hovers at levels unseen since World War II and well above the 3 percent level that economists agree is sustainable.

“The federal fiscal outlook beyond this year is daunting,” CBO Director Douglas Elmendorf said on his blog.