WASHINGTON — The Concord Coalition said today that new Congressional Budget Office (CBO) projections of approaching trillion dollar deficits, despite a period of economic growth and low unemployment, points directly to the problem of policymakers abandoning all fiscal restraint.
“The startling thing about this budget update is the extent to which it shows that legislative action — something that Congress and the president control — is responsible for the ballooning deficits. They are not innocent bystanders,” said Concord Coalition executive director Robert Bixby.
Due mostly to enactment of the recent budget deal that raised for two years – and then eliminated – discretionary spending caps, legislation increased the deficit by $1.9 trillion over 10 years, according to CBO. Even with interest costs on the debt projected to be $1 trillion less than previously thought, due to lower interest rates than CBO had assumed in the last update, the 10-year outlook has deteriorated by $809 billion.
The deficit for 2019 is now projected to be $960 billion and just over $1 trillion for 2020. Deficits are projected to average 4.7 percent of GDP over the decade. That is substantially higher than their average over the past 50 years of 2.9 percent of GDP. Over the next 10 years deficits will total $12.2 trillion.
Debt held by the public will come close to equalling the entire size of the economy within 10 years, at 95.1 percent GDP. That would be an increase of 20 percentage points of GDP relative to where debt was at the start of 2016.
“In light of these projections, the last thing policymakers should be doing is pursuing new policies without credible plans to pay for them. Even that low standard of fiscal responsibility still leaves the debt on an unsustainable path,” Bixby said.