Another reason 2012 could be the most important presidential election in our lifetimes.

WASHINGTON (WSJ) — The U.S. economy will have another big budget deficit in fiscal 2011 and faces at least a couple more years of sluggish growth, government forecasters said Wednesday.

The Congressional Budget Office projected a deficit of almost $1.3 trillion for fiscal 2011, reflecting a continued slump in tax revenue and elevated federal spending in response to the weak economy. It warned that deficits will skyrocket if some current tax and spending policies, such as income-tax cuts and a payroll-tax holiday, are extended.

The outlook for the U.S. economy also remains challenging, with growth expected to remain too slow this year and next year to make a big dent in the unemployment rate. The jobless rate will fall to 8.9% by December 2011 and 8.7% by the end of 2012, the forecast said. . . .

The third straight year of deficits above $1 trillion will push the share of U.S. debt held by the public to 67% of gross domestic product — the most since 1950, budget forecasters said. At $1.284 trillion for this year, the budget deficit will total 8.5% of U.S. GDP.