First the good news for our children and grandchildren: The days of trillion-dollar federal budget deficits may be gone — for now.
The nonpartisan Congressional Budget Office last week projected this year’s annual deficit at $642 billion.
That’s still a huge number. Yet it represents progress.
Credit the better economy, the CBO says. Other factors include slower health care inflation, higher taxes and some spending restraint.
In addition, the government is collecting dividend payments from the housing finance agencies it bailed out.
Here’s the CBO’s bad news for future generations of Americans: The somewhat smaller deficits won’t last. After dipping below $400 billion in 2015, the annual federal budget hole is projected to climb back to $900 billion by 2023.
Moreover, the nation’s total debt will soar past $19 trillion, the CBO projects, with debt again growing faster than the economy.
“There is no mystery about why the long-term fiscal challenge remains,” said Robert Bixby, executive director of the nonpartisan Concord Coalition, which advocates for fiscal responsibility. “Our population is aging and that means relentlessly higher spending on Social Security, Medicare and Medicaid, which already comprise 45 percent of the budget. Steps that have been taken so far to control the deficit have failed to address this core problem and will soon be overwhelmed by it.”
That means President Barack Obama and the members of both major political parties in Congress still have lots of work to do.
Democrats need to accept gradual changes to ease the soaring cost of entitlement spending in coming decades. Republicans need to accept limits on defense spending and strive to improve, rather than repeal, Obamacare.
Both sides of the partisan divide should be working together to implement the president’s sweeping health care law with more attention to cost containment.
Both sides also need to cooperate on simplifying the federal tax code. Lower rates, fewer loopholes and more fairness should be the goal.
This year’s deficit is down, the CBO reports. But it’s still high and will go back up without strong leadership in Washington.