December 17, 2018

Significant damage was done to America’s fiscal outlook over the past year. New legislation passed by Congress and signed by the President has widened the gap between revenues and spending, and has taken our fiscal condition from bad to worse. Unpaid-for tax cuts and new spending legislation means we will return to trillion-dollar deficits as early as next year. Interest on the national debt cost taxpayers $325 billion in 2018 and is projected to total nearly $7 trillion over the next decade — squeezing out national priorities, investments in our economy, and programs that are relied upon by millions of Americans.

The following nine charts tell the fiscal story of 2018, illustrating the damage done and the urgent need to correct course to secure economic opportunities and quality of life for every American in the future. 


1. We’re back to trillion-dollar deficits.

The non-partisan Congressional Budget Office (CBO) projects that the deficit for this fiscal year will reach $973 billion, and deficits are projected to continue climbing in the years ahead. Other than during the Great Recession and its aftermath, the U.S. government has never witnessed deficits over $1 trillion.

Federal budget deficits are projected to rise significantly


2. It’s unusual for debt to increase faster than the economy during a period of strong growth.

In fact, the United States is the only advanced economy that the IMF projects will actually increase its debt relative to the size of the economy over the next five years.

The United States is the only advanced economy that is projected to have an increase in debt as a percentage of GDP over the next five years


3. This economic growth is unlikely to last.

The GDP-boosting effects of the Tax Cuts and Jobs Act (TCJA) are expected to fade by 2020, according to forecasters, and long-term economic growth is projected to decline due to our aging population and slowing labor productivity.

Growth over the next few years is expected to slow as the recent fiscal stimulus wanes


4. Federal debt is already near its highest level as a percentage of GDP since 1950.

On this path, debt would exceed its all-time high by 2034 under current law, according to projections from the Congressional Budget Office. Rising deficits are only exacerbating what was an already unsustainable fiscal path.

The national debt is on an unsustainable path


5. Interest payments on the debt will start squeezing spending on programs that Americans care about.

Net interest costs on the debt will total nearly $7 trillion over the next decade. Next year, interest costs will surpass what the federal government spends on children, and by 2023, it will exceed defense spending.

Federal spending on interest will soon exceed other major budget categories


6. Deficits were higher in 2018 in part because the TCJA took a big bite out of corporate tax revenues.

The year-over-year drop in corporate tax payments in fiscal year 2018 was 31 percent. Such a large drop is unprecedented during a time of economic growth.

Corporate Tax receipts dropped by 31 percent in 2018


7. Not only did the TCJA reduce revenues, it also failed to simplify the tax code.

According to the Joint Committee on Taxation, there were a total of 216 tax breaks before the TCJA. Now, after TCJA's implementation, there are 223. Tax breaks, or tax expenditures, are like government spending in disguise and overall dwarf spending on major programs.

Tax expenditures are large in comparison to annual income taxes collected and to the government's major programs


8. Healthcare costs continue to rise and are one of the key drivers of government spending.

Public and private spending on healthcare is increasing because our population is aging and prices for medical care are growing faster than inflation. Although the United States spends significantly more on healthcare per person than other developed countries, we aren’t healthier, and even lag behind other countries in common health metrics.

Despite higher healthcare spending per capita, the U.S. generally does not have better health outcomes


9. Congress missed a key opportunity to reform the broken budget process.

The repeated failure to pass annual appropriations on time is a reflection of the broken budget process. Unfortunately, lawmakers missed a key opportunity when the Joint Select Committee on Budget and Appropriations Process Reform dissolved without reporting even modest recommendations.

Lawmakers have passed a total of 115 continuing resolutions since the beginning of FY 1998


Getting our fiscal house in order is essential for setting and carrying out our national priorities. Doing so could boost economic opportunity and the quality of life for millions of Americans, which in turn can fuel economic growth for generations to come. Stabilizing the federal debt could increase family incomes substantially, according to CBO data.


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