January 27, 2016

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.

    Federal budget deficits have begun rising again | SOURCE: Congressional Budget Office, Historical Budget Data, January 2015, and The Budget and Economic Outlook: 2016 to 2026, January 2016. Compiled by PGPF.

  2. Interest costs on the debt will climb sharply. Over the next 10 years, net interest costs will total $5.8 trillion.

    Net interest costs are projected to rise sharply | SOURCE: Congressional Budget Office, Historical Budget Data, January 2015, and The Budget and Economic Outlook: 2016 to 2026, January 2016. Compiled by PGPF.

  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.

    U.S debt held by the public is on an unsustainable path | SOURCE: Congressional Budget Office, The 2015 Long-Term Budget Outlook, June 2015. Compiled by PGPF. NOTE: Current law projections are from CBO's extended baseline scenario. Data for the alternative fiscal scenario include economic feedback. Debt is measured as debt held by the public.

For more details, read our full analysis on the "Summary of The Budget and Economic Outlook: 2016 to 2026."


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