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.
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Over the 2016-2025 period, CBO now projects a cumulative deficit that is $1.5 trillion larger than the $7.0 trillion that it projected in August.
The deficit will keep increasing and reach $1,366 billion, or 4.9 percent of GDP, in fiscal 2026, the office said. At 2.9% of GDP, the expected shortfall will mark the first time that the deficit has risen in relation to the size of the economy since peaking at 9.8% in 2009. It is clear now that deficits will no longer be in decline as they have been for the past five years, and debt will continue to increase from near-record high levels. “Those battle lines over keeping a one-to-one ratio on defense and non-defense spending have been very strongly drawn”.
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 CBO raised its cost projections for Medicaid due to higher-than-expected spending and enrollment for ObamaCare’s expansion of the program.
While these dynamics increase the impetus to “make smarter choices” on defense, the deficit is not the only factor in national security resourcing decisions.
The budget deficit for 2016 will be 31% higher than projected just a few months ago, thanks in great part to a $900 billion tax deal passed by Congress in December.
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CBO projects that because growing deficits will drive up debt, this will increase the risk of a United States fiscal crisis if investors become unwilling to finance the government’s borrowing needs. As it has in most years since 1930, the country spends more than it takes in. If the economy grows more quickly, the debt will be a smaller share of the economy. CBO expects a “substantial increase” in net interest spending.
