The Congressional Budget Office (CBO) today released new long-term projections that underscore the need for Washington to move beyond excessive partisanship and budget gimmickry to pursue the broad fiscal reforms necessary to meet the nation’s fiscal and demographic challenges.
“There are no gimmicks to get around the demographics,” says Robert L. Bixby, executive director of The Concord Coalition.
The annual CBO report looks out beyond the usual 10-year frame for fiscal analysis to the next 25 years and beyond. That perspective highlights the mounting pressure on the budget from an aging population, rising health care costs, an inefficient tax system and rising interest payments.
Bixby calls the CBO report “an invaluable reminder that elected officials in both parties must spend less time cooking up budget gimmicks and more time working together to figure out how to put the nation on a more responsible and sustainable path.”
Federal debt held by the public is already 74 percent of GDP, quite high by historical standards. Under current law, CBO says, that figure would decline slightly over the next few years but then start a relentless climb. In 25 years it would exceed 100 percent of GDP -- and perhaps even more as the result of economic damage from so much government debt.
Under current law, the budget office projects, federal spending for Social Security and major federal health care programs could rise to 14 percent of GDP by 2039, twice the past average. Interest costs would rise rapidly as well.
Everything else in the federal budget, however, would decline to only 7 percent of GDP in that period. That’s far below the 11 percent average of recent decades, raising questions about how realistic lawmakers are being with their current plans.