WASHINGTON -- The Congressional Budget Office (CBO) released projections today that show the federal deficit rising this year for the first time since 2009 and the government sinking deeper into debt over the next decade, a problem that The Concord Coalition says every candidate for federal office should address in this year’s political campaigns.
“Budget projections have turned a corner again, and this time it’s for the worse,” said Robert L. Bixby, executive director of The Concord Coalition. “Today’s CBO numbers clearly demonstrate that recent legislation combined with the relentless fiscal pressures of an aging population add up to steadily rising debt from this point forward. Each of the presidential candidates should explain to voters how they would work to reverse this dynamic or admit that they support the ‘Do Nothing’ plan.”
A summary of CBO’s annual Budget and Economic Outlook, released this morning, projects that under current law federal deficits -- which have dropped in recent years -- will begin rising again this year to $544 billion (2.9 percent of GDP) and could reach $1.4 trillion by 2026 (4.9 percent of GDP).
The deficits projected over the next decade would add a total of $9.4 trillion to the nation’s debt. Compared to the CBO’s last outlook, the projected deficit total over the same 10-year period has grown by $1.5 trillion.
The CBO plans to release the full report Monday but said it was releasing the summary early this year to help Congress work on its forthcoming budget resolution.
The summary takes into account legislation that Congress passed late last year, including tax legislation that will drain federal revenue by $425 billion and another $324 billion in spending increases that add to deficits over the next 10 years. Lawmakers made no real effort to offset the deficit increases.
“Unfortunately, the short-term drops in the deficit in recent years have created a sense of complacency in Washington over further borrowing,” Bixby said. “While the CBO each year warns of fundamental problems in the federal budget, it is particularly distressing to see the confirmation in today’s report of how much elected officials worsened the fiscal picture with legislation approved just weeks ago.”
Key drivers of the projected deficits are the aging of the population and rising health care costs, both of which boost spending on the big federal entitlement programs each year. The CBO projected that almost half of the $2.5 trillion increase in spending over the next 10 years is for Social Security and Medicare.
Although the CBO report focuses on the next decade, the budget office suggests such pressures will lead to the debt rising to 155 percent of GDP over the next 30 years.
Federal debt held by the public is already high by historical standards relative to the size of the U.S. economy. The budget office says such debt will climb from about 76 percent of GDP at the end of this year -- the highest amount since World War II -- to 86 percent at the end of 2026. CBO expects a “substantial increase” in net interest spending.
“The rising debt means more and more tax dollars must be spent simply on interest payments, cutting into the money available even for high national priorities,” Bixby said. “In addition, high government debt can hobble the economy, put upward pressure on tax rates, raise the risks of instability and crisis in the financial markets and undermine America’s position of global leadership. Worst of all, without fiscal reform, we could unfairly pass an enormous burden of debt on to our children and future generations.”
“Voters can expect to hear a lot of promises from political candidates this year,” Bixby added. “But we should expect those candidates to clearly explain how they would pay for their proposals while reining in the federal debt. So far many of the presidential candidates have fallen short.”
Media Contact: Steve Winn, (703) 254-7828, [email protected]
The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC