In other words, intentional efforts to reduce annual deficits and stabilize the debt are working. But if you retrain your gaze from the government's balance sheet to the real economy, you'll see the impact of that austerity is fewer people working and slower growth. According to CBO, the recovery won't really pick up steam until next year, and the economy won't have recovered until the end of 2017, when it will reach its output potential, and unemployment will fall to 5.5 percent.
CBO notes that the U.S. hasn't experienced six consecutive years with unemployment exceeding 7.5 percent in over 70 years.
The report does contain a thin silver lining for President Obama, who pledged in his 2008 campaign to halve the deficit in his first term.
"At an estimated $845 billion, the 2013 imbalance would be the first deficit in five years below $1 trillion; and at 5.3 percent of GDP, it would be only about half as large, relative to the size of the economy, as the deficit was in 2009," if current laws don't change, according to CBO.
However, this particular budget and economic forecast is highly uncertain, even in the short term. Looming fights over the sequester, government appropriations, and the debt limit could dramatically alter the fiscal outlook and thus the economic forecast, for the year and coming decade. Similarly, deficits will be higher than projected if Congress, as it routinely does, extends expiring tax credits and overrides a 25 percent cut to Medicare physician reimbursement rates before the end of the year.