New federal budget projections show that under current law $7.6 trillion could be added to the nation’s debt over the coming decade — or perhaps as much as $9.5 trillion, if more realistic assumptions are made about future policy decisions.
The Concord Coalition said the projections, released Monday by the Congressional Budget Office (CBO), show why elected officials should move forward on fiscal reforms.
The new report, which also deserves attention from 2016 presidential hopefuls, shows federal deficits slowly starting to rise again after next year and topping the trillion-dollar mark in 2025. Debt held by the public will also keep rising, going from 74 percent of GDP this year to 79 percent of GDP in 2025.
“The relative stability shown in the numbers over the next few years provides an opportunity to enact policies that move the budget toward a more sustainable long-term path,” says Robert L. Bixby, Concord’s executive director.
“Unfortunately, some may take it as a reason to put fiscal policy on the back burner,” he added. “That would be a misreading of today’s report, which clearly demonstrates steadily rising deficits and debt returning at about the time the next president takes office.”
Key factors: The population is aging, more people are eligible for government benefits, health costs will continue to rise, the tax system is inefficient, and interest payments on the debt will increase sharply.
“Within 10 years, mandatory spending programs and interest on the debt will consume 94 percent of projected revenues,” Bixby notes. “Discretionary spending, including national defense and domestic investments, will be continuously squeezed.”
CBO Budget and Economic Outlook: 2015-2025
CBO Director Doug Elmendorf’s House Testimony Today
Budget and Economic Outlook in Slides (CBO)
Long-Term Outlook Shows Demographics Drive Deficits (Concord)