3 Takeaways from CBO’s Budget and Economic Outlook
The outlook for the federal budget has worsened considerably since last year, according to a new report by the Congressional Budget Office (CBO). The sharp deterioration in the budget outlook stems from the large spending and tax bill that was enacted in December 2015, which increases deficits considerably over the next 10 years and beyond. CBO’s latest report highlights that America’s fiscal policy over the long-term remains unsustainable and threatens our future economy.
The CBO report finds that:
1. The federal budget has a structural mismatch between spending and revenues, which will lead to rising deficits over the next decade and beyond. Federal deficits will exceed the $1 trillion mark in 2022 and deficits will total $9.4 trillion over the next 10 years.
2. Interest costs on the debt will climb sharply. Over the next 10 years, net interest costs will total $5.8 trillion.
3. Federal debt is projected to rise to 86 percent of gross domestic product (GDP) in 2026 — double its 50-year average and higher than at any point since just after WWII. Debt levels thereafter will climb sharply as a share of GDP.
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Further Reading
What Are the Consequences of a High and Rising National Debt?
The high and rising national debt harms the economy, makes life less affordable, and jeopardizes the economic prosperity of Americans.
6 Ways the Rising National Debt Can Fuel a Fiscal Crisis
The national debt is now as large as the entire U.S. economy, and the risk is increasing as the country accumulates debt faster than ever.
National Debt Projected to Hit 175% GDP; Interest Totals $99 Trillion
Compared with the previous 30-year projections, spending will be higher, revenues lower, interest rates and interest payments elevated, and the national debt significantly larger.