The Office of Management and Budget (OMB) has released its annual Mid-Session Review, saying the President’s proposals for 2017 would substantially reduce the deficit from the one expected for Fiscal 2016, which ends Sept. 30.
OMB now projects the 2016 deficit at $600 billion, $16 billion lower than its February projection but still higher than last year’s actual deficit of $438 billion. The deficit as a share of the economy is projected to be 3.3 percent of GDP this year.
Under the President’s proposals, OMB says, the 2017 deficit would drop to $441 billion and 2.3 percent of the economy. Deficits would remain under 3 percent of GDP through 2026, and debt held by the public would fall from 77 percent of GDP in 2017 to 73 percent in 2026.
Over the 10-year budget window, Fiscal Years 2017-2026, OMB now expects cumulative deficits to be $881 billion lower than projected in the February budget. The largest single change is that interest costs on the debt are now projected to be $770 billion lower over that time than earlier projected.
OMB’s review argues that the administration’s proposed budget policies for Fiscal 2017 “achieve the core goal of fiscal sustainability by stabilizing the debt as a share of the economy and putting it on a declining path.” But little legislative action on the plan appears likely.
Under the trendline of current law, the Congressional Budget Office (CBO) and other analysts have warned for some time that the years of declining deficits are over. Driven by the needs of an aging population, health costs and inefficiencies in the tax code, deficits under current law are expected to rise steadily in the coming years.
2016 Mid-Session Review (OMB)