The Congressional Budget Office (CBO) released its Budget and Economic Outlook today, projecting high and rising deficits and debt over the next decade and beyond.
CBO’s report shows:
- Debt held by the public will increase by more than $12.5 trillion under current law over the next decade – from $16.1 trillion today to $28.7 trillion by 2029.
- Debt as a share of the economy will rise rapidly, from today’s post-war record of 78 percent of GDP to nearly 93 percent of GDP by 2029. Under CBO’s Alternative Fiscal Scenario (AFS), debt will reach 105 percent of GDP by 2029, approaching the all-time record set just after World War II.
- Annual budget deficits will also steadily rise under current law, eclipsing $1.1 trillion by 2022 and reaching nearly $1.4 trillion late in the decade. Under the AFS, trillion-dollar deficits will return by next year and the budget deficit will exceed $2 trillion late in the decade. Depending on the scenario, budget deficits will reach 4.4 to 7.1 percent of GDP by 2029.
- Growing deficits and debt are the result of rising spending and depressed revenue. Under current law, spending will grow from 20.3 percent of GDP in 2018 to 22.7 percent by 2029 while revenue will remain around 17 percent of GDP through 2025 and rise to 18.3 percent by 2029, assuming many recent tax cuts expire. Under the AFS, revenue will remain at 17.0 percent of GDP in 2029 while spending rises to 24.1 percent.
- Cumulative deficits through 2028 are projected to be $1.2 trillion lower under current law than in CBO’s last baseline from April 2018. The entire improvement can be attributed to two factors that may not ultimately materialize: lower assumed disaster spending and new tariffs imposed by the Administration.
- CBO continues to project strong economic growth for 2019, but real annual growth will fall below 2 percent for most of the decade.
CBO’s latest projections show that the fiscal situation will continue to deteriorate as a result of irresponsible tax and spending legislation and the growth of health, retirement, and interest spending. Lawmakers must act sooner rather than later to prevent the slower wage growth, higher interest payments, reduced fiscal space, and increased risk of fiscal crisis that would likely occur on our current path.
