There’s good news and bad in the latest Budget and Economic Outlook from the non-partisan Congressional Budget Office.
In its report Tuesday, the CBO projected modest growth for the remainder of the year, and then strong growth in the coming two years. Incomes should rise, but then flatten out for the rest of the decade until 2025.
The good news: The federal deficit for the fiscal year that ends on Sept. 30 is likely to be almost $60 billion lower than forecast back in March. That’s thanks to an improving U.S. economy that’s generating more revenue for government coffers.
The not so good: Absent some change in policy, mandatory spending on programs for the elderly and net interest on the debt will gobble up an ever-greater percentage of government spending.
While deficits are down this year, the real story is that they are on the rise and that our national debt is at record-high levels and growing.
Judd Gregg, co-chair of Fix the Debt Campaign.
“If current laws generally remain unchanged, within a few years the deficit will begin to rise again relative to GDP, and by 2025, debt held by the public will be higher relative to the size of the economy than it is now,” the CBO said.
The budget scorekeeper expects the federal deficit to be about $426 billion when the fiscal year closes, making the sixth straight year that deficits as a percentage of the overall economy have fallen.
“Our nation’s long-term debt outlook, however, is not so rosy. I would caution those who would use this report as an opportunity to take these short term-savings and push for more spending,” Senate Budget Committee Chairman Mike Enzi, R-Wyo, said in a statement.
CBO statisticians expect federal health programs to rise from 5.2 percent of the overall economy to 6.2 percent over the next decade.
Social Security spending would rise from 4.9 percent of GDP to 5.7 percent as more Baby Boomers born between 1946 and 1964 enter retirement. This number would be even higher if not for low inflation that is keeping in check cost-of-living adjustments made to Social Security benefits.