The US faces annual budget deficits of 5 per cent of gross domestic product even after the economic crisis is over unless there are big changes in policy, the incoming White House budget director warned on Tuesday.

Peter Orszag, the nominee for director of the Office of Management and Budget, told the Senate that “in the short run, the most pressing challenge is to jump-start the economy.” But over the long run, “a key challenge is putting the budget on a more sustainable course”.