Our Quick Take on CBO's August Projections
The Congressional Budget Office (CBO) just released updated baseline projections showing deficits and debt rising in the coming years. CRFB will release a full analysis later this week, but the report shows as previous CBO projections have shown this year that the debt is on an unsustainable path.
CBO now projects deficits more than tripling, from $438 billion in 2015 to $1.24 trillion by 2026, with trillion dollar deficits returning by 2024. CBO now projects the deficit for 2016 to be $152 billion higher than 2015 at $590 billion.
Debt held by the public, meanwhile, will grow by $10 trillion from $13.1 trillion at the end of 2015 to $23.1 trillion by 2026. As a share of Gross Domestic Product (GDP), debt will grow from 74 percent of GDP in 2015 – already twice its pre-recession levels – to 85.5 percent of GDP in 2026. March projections showed debt that was slightly lower in the short term but on track to reach a similar level as a percent of GDP (85.6 percent) by 2026.
Changes in deficits come entirely from economic and technical changes. Notably, the 2016 deficit, which had been projected to grow to $534 billion, is now expected to grow to $590 billion because of lower than expected revenue.
Over ten years, deficits are $712 billion lower than projected in March between 2017 and 2026, though since GDP is also projected to be lower, debt as a percent of GDP in 2026 is about the same at 85.5 percent.
CBO's latest report shows the same picture as it has throughout the year: deficits and debt will continue to increase over the next ten years, bringing debt to a very high level. The complacency that lawmakers have shown about debt over the past few years must end so they can address the troublesome trajectory of deficits and debt.
Check our website later today for more complete analysis of CBO's new report.