Recommended Reading: CBO highlights the return to rising deficits

Last week, the nonpartisan Congressional Budget Office (CBO) released a summary of its annual Budget and Economic Outlook. This report outlined the nation’s fiscal outlook for the next 10 years.

The report received significant news coverage, highlighting CBO’s finding that in 2016, “the federal budget deficit will increase, in relation to the size of the economy, for the first time since 2009.” Moreover, CBO projected that federal debt will rise to 86% of gross domestic product (GDP) in 2026 — double its 50-year average and higher than at any point since just after WWII.

There was a range of coverage and analysis looking at what this news means for our nation’s long-term fiscal outlook:

• The Peterson Foundation’s research team found that the CBO report provides further evidence that “America’s fiscal policy over the long-term remains unsustainable and threatens our future economy.”
• The Committee for a Responsible Federal Budget noted, “The budget outlook could be even worse than projected if lawmakers continue to pass legislation without truly offsetting its costs.”
• "Debt is on an unsustainable path even before it reaches 100% of GDP,” Diane Lim wrote in the Wall Street Journal. “Some seem to think that 100% of GDP, a rate of public debt the U.S. hasn’t had since World War II, is some magic threshold past which the U.S. economy will plunge into crisis. It is not a particular level of debt to GDP that matters but the trajectory..." She noted, “No one can know for sure where a tipping point might be, when worldwide investors might decide U.S. government bonds are no longer the world’s safest investment and the U.S. suddenly loses its (seemingly limitless) line of credit."
• The CBO report is “a wakeup call for a nation that has turned its focus away from the issue in recent years,” according to Francine Kiefer, writing for the Christian Science Monitor. "It raises questions about whether Washington can address the rising deficit without resorting to the brinkmanship that created debt-ceiling crises and resulted in an almost universally reviled budget sequester.”
• Brian Faler, writing for POLITICO, noted that lawmakers “were uncharacteristically quiet about the CBO analysis, mostly leaving it to budget watchdogs to decry the worsening outlook.”
• The Washington Post editorial board took the leading presidential candidates to task for offering “no serious plans” to address the problem.
• “On the campaign trail, there has been only an echo of the once-dominant mantra that warned against the exploding time bomb of rising deficits and oppressive debt,” Chuck Raasch wrote in the St. Louis Post-Dispatch, outlining the political pressures that have sidelined the debate. Raasch notes, however, that recent shifts in the House and rumblings in Congressional primaries “could thrust the debt-and-deficit debate back in to the mainstream of Campaign 2016."

There is still time to act. The Peterson Foundation points out that “now that the economy is stronger, we have the opportunity to put in place sensible reforms that will put our long-term fiscal trajectory on a sustainable path."

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