WASHINGTON -- With today's new estimates by the
Congressional Budget Office (CBO) showing a continued decline in the federal
government's long-term fiscal outlook, The Concord Coalition warned that
Congress and the Bush Administration must not become complacent with the
prospect of budget deficits for as far as the eye can see.
The CBO baseline shows declining deficits after 2003 and surpluses returning by 2007. However, this projection is not realistic because it assumes, as CBO must, that all tax cuts scheduled to expire under current law will do so and that appropriations will grow no faster than the rate of inflation through 2013 -- less than a third of the recent average. Under the more plausible scenario that all expiring tax provisions will be extended and that appropriations will keep pace with economic growth rather than inflation, budget deficits persist throughout the decade and the cumulative 10-year surplus of $1.3 trillion becomes a deficit of $1.6 trillion -- even if the Social Security surplus is included.
“No one should be lulled into complacency about the long-term budget outlook. Over 90 percent of the projected 10-year surplus comes in the last three years. Any realistic assessment of today's CBO report shows that deficits are likely to persist for the foreseeable future, even without major new spending or tax cut initiatives that could add trillions more in debt. This poses a threat to our long-term economic future and a serious policy challenge for the President and Congress because looming just beyond the 10-year budget window is the daunting fiscal challenge of the baby boomers' retirement. America should not approach this fiscal gauntlet encumbered by deficits as far as the eye can see. Sound public finance, fairness to the next generation, and the long-term health of the economy all demand that we resume a path toward surpluses as the economy recovers,” said Robert Bixby Executive Director of The Concord Coalition.
“Policymakers seem to have given up any thought of reestablishing a fiscal policy goal. Without one, deficits are likely to drift higher. Until last year, there was a bipartisan commitment to the responsible long-term goal of running a budget surplus at least equal to the size of the Social Security surplus. Today's CBO report shows how far things have drifted from that goal. Just two years ago, CBO projected a $3.1 trillion non-Social Security surplus. That surplus has now turned into a $2.2 trillion deficit,” Bixby said.
The Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.
Chart: Concord Coalition Plausible Baseline Compared to CBO Baseline: 2004-2013 (PDF format; Requires Adobe Acrobat Reader)