CBO report shows that despite temporary improvements over the past few years, the country continues to be on an unsustainable budget path.
On Tuesday, the Congressional Budget Office released its preliminary budget and economic outlook for 2016-2026. The report shows that despite temporary improvements over the past few years, the country continues to be on an unsustainable budget path.
From the report it remains clear that our nation is on the wrong path.
Spending, deficits, and debt are expected to expand significantly over the next decade, while entitlement and interest spending will continue to consume more and more of the budget. It is time for Congress to take steps towards fixing the country’s spending problem and put us back on a path to secure economic growth and opportunity for future generations.
Here are five key findings from the report:
- Spending Continues to Skyrocket
CBO projects that spending will rise from $3.7 trillion in 2015 to $6.4 trillion in 2026; spending will exceed 23 percent of GDP in 2026 (2.8 percentage points above the 50 year historical average).
This represents an increase of more than $2.7 trillion over the next 10 years, outpacing the growth of the economy over the same period of time. The largest drivers of growing spending are entitlement programs such as Medicare, Medicaid, Obamacare, and Social Security.
Another concerning factor is growing interest on the debt. Spending on interest has climbed steadily over the past several years and could soon surpass what is spent on national defense and other priorities.
If left unchecked, CBO projects that net interest spending will climb from its current rate of 1.3 percent of GDP in 2015 to 3.0 percent of GDP by 2026. If Congress’ last budget “deal” is any indication, there are no signs that lawmakers will get spending and borrowing under control anytime soon.
- Deficits Will Again Rise to Unsustainable Levels
After a brief period of declining deficits over the past few years (reaching a six year low of $466 billion last year), CBO projects that deficits will once again begin to rise for the first time since 2009 to reach trillion dollar levels as soon as 2022; and approaching nearly $1.4 trillion by 2026.
It is important to note that the decrease of the past few years was not primarily a result of better policy by Washington, but rather the winding down of excessive stimulus spending, the economy recovering from the 2008 recession, and tax increases imposed under President Barack Obama. Spending controls implemented by the Budget Control Act of 2011 helped some too.
Just in the five months since the Congressional Budget Office last updated economic projections, the estimated 2016 deficit has risen an additional $130 billion, mainly due to the retroactive extension of expiring corporate and individual income tax provisions. With entitlement spending expected to only rise over the next decade, unless major steps towards reform are taken, deficits will continue to spiral out of control.
- Our National Debt Will Soon Consume the Economy
Continue reading below for 3,4 and 5.