Discuss as:

Report: US deficit falls slightly to $1.1 trillion

A new budget report released Tuesday predicts the U.S. government will run a $1.1 trillion deficit in the fiscal year that ends in September, a slight dip from last year but still very high by any measure. A previous estimate was for $973 billion. 

The Congressional Budget Office report also says that annual deficits will remain in the $1 trillion range for the next several years if Bush-era tax cuts slated to expire in December are extended, as commonly assumed. The CBO is a non-partisan budget analyst for Congress.

If the CBO estimate for this year's deficit proves accurate, fiscal year 2012 would be the fourth consecutive year of federal budget deficits topping $1 trillion. The shortfall registered $1.3 trillion in fiscal 2011, up from $1.29 trillion in 2010. It reached $1.42 trillion in 2009, the highest ever.

The report is yet another reminder of the perilous fiscal situation the government is in, but it is commonly assumed that little will be accomplished on the deficit issue during an election year.   

The study also predicts modest economic growth of 2 percent this year and forecasts that the unemployment rate will remain above 8 percent this year. That is based on an assumption that President Barack Obama will fail to win renewal of payroll tax cuts and jobless benefits by the end of next month.   

The CBO report projects the unemployment rate will gradually decline to around 7 percent by the end of 2015, before dropping to near 5.5 percent by the end of 2017.  Inflation and interest rates will remain low during the next few years.

The new figures also show that last summer's budget and debt pact has barely made a dent in the government's fiscal woes.   

The pact imposed $2.1 trillion in spending cuts over 10 years, but the latest estimates predict $11 trillion in accumulated deficits over the 2013-2022 time frame if the Bush-era cuts in taxes on income, investments, large estates and on families with children are renewed. Obama has proposed largely extending them, but allowing them to expire for upper-income taxpayers.   

The deficit would require the government to borrow 30 cents of every dollar it spends. Put another way, the deficit will reach 7 percent of the size of the economy, a slight dip from last year's 8.7 percent of gross domestic product. 

Vote: How would you close the budget gap?

The CBO report shows that the deficit dilemma would largely be solved if the tax cuts enacted in 2001 and 2003 -- and renewed in 2010 through the end of this year -- were allowed to lapse. Under that scenario, the deficit would drop to $585 billion in 2013 and to $220 billion in 2017.

Congress is expected to extend at least some of those tax cuts by the end of this year. 

The Associated Press contributed to this report.

More content from msnbc.com and NBC News