Blog Post

AEIdeas

You can quibble with the debt and deficit forecasts from the Congressional Budget Office, but they’re a pretty good place to start for the conservative, cautious policymaker. And the updated CBO forecast is one of more and more red ink over the next decade.

CBO: “In CBO’s baseline, deficits rise because growth in revenues over the next 10 years is outpaced by increases in spending — particularly for Social Security, Medicare, and interest payments on the federal debt. The deficit remains at roughly 2.8 percent of GDP through 2018 but climbs to 4.9 percent of GDP by 2026. The cumulative deficit projected for the 2017–2026 period is $9.3 trillion.” And the publicly held debt would be $24 trillion, gross debt $29 trillion.

And this chart — which I love — shows the trends of mandatory/entitlement spending gobbling up more and more of the budget over time:

​Even if the CBO is wrong about interest rates rising and debt payments stay steady as a share of GDP, the federal government would still be running a 3.3% deficit in 2026.