CBO Releases Update on Budget and Economic Outlook
Today, CBO released an update to its economic and budget projections for the coming decade, originally reached in February and March. Under its current law baseline, debt projections have increased to $16.1 trillion by 2020, up a trillion dollars from the previously projected $15 trillion amount. Although projections for the next few years remained mostly the same, CBO’s projections for the cumulative deficit over the next ten years have increased by about $300 billion, from $5.9 trillion predicted in March to more than $6.2 trillion now expected today.
The graph below shows that deficits will decline over the next few years due to the effects of the economic recovery, which will increase revenues from taxation and decrease outlays (especially with the end of spending on recent stimulus packages and the drawdown in Iraq and Afghanistan).
CBO’s newest forecasts only reaffirm that even under the most conservative, baseline projections, debt and the deficit will continue to grow in the coming years—and even more quickly if policymakers follow current policy, instead of current law. As the economy takes slow steps on the road to recovery, growing debt and deficits could hamper this—so we must make a sustainable fiscal plan our priority now. Stay tuned for CRFB’s more detailed analysis of the August update soon.