The Decade of Deficits: The Latest Ominous Projections from the Congressional Budget Office

Brief

The Decade of Deficits: The Latest Ominous Projections from the Congressional Budget Office

Abstract

In January, the Congressional Budget Office (CBO) released its first economic and budgetary outlook of the decade. Even prior to the recent COVID-19 crisis, along with its attendant impact on the budget, CBO projected a deficit of more than $1 trillion for fiscal year 2020. The federal budget is on track for seemingly endless, unsustainable, and rising deficits. The CBO report showed current deficits already averaging over 4 percent of gross domestic product (GDP); they averaged just 1.5 percent of GDP over the past 50 years during strong economic times. As recovery from the current recession occurs, and new tax and spending measures are considered, they must build upon the base of what our spending and tax systems have already set in motion.

Total spending is increasing at a faster rate than revenues and national income, while mandatory spending programs, which continue automatically without new appropriations, are expanding at a faster rate than discretionary spending programs. Meanwhile, health care, Social Security, and interest costs almost totally dominate this growth in spending, with other government programs in significant decline. In recent years, the federal government has not taken any decisive steps to alter this overall fiscal trajectory.

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