Tax cuts expiry to slow US growth US economic growth will slow dramatically if tax rises and spending cuts come into effect as planned in 2013, according to new figures from the Congressional Budget Office. The expiry of tax cuts originally passed by president George W. Bush, the end of a 2 per cent payroll tax holiday and automatic spending cuts agreed last August will reduce growth to just 1.1 per cent in 2013 unless changes are made. The figures from the bipartisan CBO, which yesterday projected a fourth consecutive trillion-dollar deficit for 2012, show how high the economic stakes will be when tax policy is hammered out after November's presidential election. Under an "alternative fiscal scenario" that assumes most tax cuts will be extended and spending cuts delayed, the CBO's growth forecast for 2013 rises to 2.75 per cent. US government debt, however, would still rise from around 73 per cent of GDP to 94 per cent by 2022, and deteriorate further as healthcare costs continue to rise. Many countries in the debt-ridden eurozone have similarly large debt levels, although their economies are much smaller. "Allowing our national debt to increase unchecked is an unacceptable risk to the future stability and prosperity of our nation," said Michael Peterson, vice chair of the Peter G Peterson Foundation, which works on fiscal issues. A future economy burdened by massive interest costs cannot grow, and the critical resources we need to invest in our future will simply not be there unless we get our fiscal house in order. The CBO also estimates that the economy will not produce at its full potential until 2018, and raised its projections for unemployment through 2021. With interest rates expected to remain low, however, the CBO said the government's interest payments would fall by $538bn over the next decade.