The Congressional Budget Office released a new report Tuesday that includes some good short-term news on federal deficits but warns that they could add $7.9 trillion to the debt over the next decade.
The CBO’s Budget and Economic Outlook is “an important reminder that our elected officials must still address the country’s unsustainable fiscal policies and long-term economic challenges,” says Concord Coalition Executive Director Robert L. Bixby.
The budget office estimates that deficits will drop this year and next. After that, however, they will start rising again as Washington struggles with high health care spending, rising interest costs, a dysfunctional tax system and an aging population.
Even the estimated deficit total of $7.9 trillion over 10 years relies on a number of questionable assumptions based in current law. Under more plausible assumptions in certain areas, the deficits could total $9.4 trillion over the next decade.
Other key points in the report:
- Federal debt held by the public will equal 74 percent of GDP at the end of this year and will climb to 79 percent over the next decade — levels that are “very high by historical standards” and could hurt long-term economic growth.
- Interest costs, major health care programs and Social Security will account for all of the projected growth in federal spending as a share of GDP over the next decade.
- Despite the recent slowdown in the growth of health care costs, Medicare spending is expected to rise by more than 80 percent, and overall annual health expenditures are set to double, within 10 years.
- More than 200 tax expenditures are projected to lower federal revenue in the current fiscal year by $1.4 trillion, which amounts to more than half of all federal revenues.
The Budget and Economic Outlook: 2014-2024
CBO Press Briefing on Budget and Economic Outlook
CBO Director’s Testimony on Budget and Economic Outlook