October 20, 2014

Budget Projections Show Washington Must Re-examine Fiscal Priorities

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

New federal budget projections paint an alarming picture of the need for Washington to set better priorities and resist the temptation to dig the government into even deeper trouble with more deficit-financed spending and tax cuts.

Our analysis, discussed in a statement last week on the new budget numbers from the Congressional Budget Office (CBO), shows that things could easily turn out to be even worse than the government numbers indicate. Our “plausible baseline” projections, plugging in certain reasonable assumptions, show that deficits could total $15.2 trillion over the next decade.

“Unfortunately, as the election draws nearer, partisan rhetoric is getting as ugly as the numbers,” said Bob Bixby, Concord’s executive director. “This threatens to undermine the work of the president’s bipartisan fiscal commission, which will need to produce recommendations that deviate from strict party orthodoxy if they hope to achieve success.”

The CBO report shows that this year’s health care reform legislation – even with politically difficult cost controls – will provide only a small amount of deficit reduction. Joshua Gordon, Concord’s policy director, says the projections “point out that we must continually revisit reform and build in more cost controls.”

The struggling economy is still the most dominant force in continued large deficits. "The CBO clarifies that although our current deficit-financed fiscal policies might help our weak economy in the short term, they quickly become detrimental to our economy if continued beyond the next two years," said Diane Lim Rogers, Concord’s chief economist.

Cliff Isenberg, Concord’s chief budget counsel, notes that the CBO projections also assume that federal discretionary spending will decline significantly over the next 10 years. That, he says, would require “a commitment to fiscal responsibility which has rarely occurred during the appropriations process.”