Projections from the Congressional Budget Office last week confirm that the most powerful factors in the current budget dynamic are aging, health care costs and interest on the growing federal debt – all things that Concord Coalition Executive Director Robert L. Bixby says political leaders seem the least interested in doing anything about.
CBO’s current-law baseline for the next 10 years shows discretionary spending, including defense, shrinking from 7.6 percent of the economy (GDP) to only 5.5 percent, which would be the lowest level on record. Except for Social Security and the major health care programs, mandatory spending is also projected to shrink.
But those savings would all be canceled out by higher spending on Social Security, health care programs and interest, all of which would grow faster than the economy – by a cumulative 3.6 percent of GDP.
Under current law, the deficit would shrink over the next decade because of increased revenues. The debt, however, would still be 74 percent of GDP and rising in 2023.
“The lesson for policymakers is clear,” Bixby writes in a new blog post. “Even with remarkable restraint on discretionary spending and higher taxes on ‘the rich’ from the fiscal cliff deal, not enough has been done to put the budget on a sustainable path. Nor will it ever be enough if those are the boundaries of deficit-reduction efforts.”