As We Enter the New Fiscal Year, A Look Back at FY 2016
While most of the country will not be celebrating the new year for another three months, today marks the turnover of the fiscal year (FY) with FY 2016 giving way to FY 2017. The passage of a continuing resolution (CR) earlier in the week means that the government will be funded for at least the first two months of the new year, until December 9. But before we look forward to FY 2017, let's look back at some of the important numbers and developments in FY 2016.
- $14,173,423,516,895.82: Debt held by the public. As of September 30, debt held by the public sits at $14.2 trillion, a $1 trillion increase since the beginning of FY 2016. Though some of this increase reflects the end of "extraordinary measures" used to avoid hitting the debt ceiling early in the fiscal year, much of the increase comes from the FY 2016 deficit.
- $590 billion: The budget deficit. Though final numbers will not be available for a few weeks, the Congressional Budget Office (CBO) projects that the 2016 deficit will be $590 billion, $152 billion higher than the $438 billion 2015 deficit. The entirety of this increase can be explained by the tax deal and budget agreement in late 2015 which added to FY 2016 deficit levels.
- $895 billion: The amount lawmakers have increased the debt this year. Legislation enacted during this fiscal year has increased ten-year deficits by about $895 billion, with the vast majority of that amount coming from the tax deal in December of 2015. The other deficit increases come from legislation that was either not fully offset or was offset with gimmicks.
- $200 billion OR $5.3 trillion: Amount the next president's proposals would add to projected debt levels. According to our latest update of Promises and Price Tags, the proposals of Democratic candidate Hillary Clinton would add $200 billion to debt by 2026, on top of the $9 trillion increase under current law; the proposals of Republican candidate Donald Trump, meanwhile, would add $5.3 trillion.
- 500: Number of days the budget agreement suspended the debt ceiling. After the Treasury Department spent several months using extraordinary measures to avoid hitting the debt ceiling in FY 2015, lawmakers suspended it for 500 days through March 15, 2017 in the budget agreement that became law on November 2, 2015. Though extraordinary measures will likely again buy some time when the debt ceiling is reinstated, lawmakers will have to deal with it before the close of next year.
- 70: Days lawmakers have to fund the government. With lawmakers passing a continuing resolution (CR) to fund the government through December 9, lawmakers will now have 70 more days to work on the FY 2017 appropriations bills or pass another CR into calendar year 2017 to punt the issue onto the new President and Congress.
- 66: Years since debt was this high as a share of GDP. CBO projects that debt held by the public will reach 76.6 percent of GDP at the end of FY 2016, up from 73.6 percent a year ago. This total is the highest since 1950 and the eighth highest in history (the other seven all coming immediately after World War II, between 1944-1950).
- 18: Years until the combined Social Security trust fund run out. Although legislation enacted this fiscal year postponed the insolvency date of the Social Security Disability Insurance (SSDI) trust fund to 2023, it did so mostly by reallocating funds from the old-age portion of Social Security. As a result, the Social Security Trustees project that the (theoretically) combined trust funds will run out by 2034, when today's 49 year-olds reach the normal retirement age (see how old you'll be). CBO projects both SSDI and overall insolvency will come sooner in 2022 and 2029, respectively.
- 5: Years until the Highway Trust Fund runs out. Although revenue drawn from the Highway Trust Fund currently covers only four-fifths of highway and mass transit spending, the legislation passed this year extended the life of the trust fund from 2016 to 2021 with a $70 billion general revenue transfer. Some of that transfer was offset, as we had recommended, but most was offset with budget gimmicks -- most significantly, a transfer from the Federal Reserve's capital surplus account. In five years, lawmakers will again have to confront the growing gap between gas tax revenue and highway spending.
- 0: Budget resolutions passed by either chamber of Congress. After producing a concurrent congressional budget resolution for the first time since 2009 last year, neither the House nor Senate was able to pass a budget resolution this year. House Budget Committee Chairman Tom Price (R-GA) produced a budget, but it was never voted on, while the Senate did not produce or take up one. This failure to enact a budget resolution is just one reason budget process reform is necessary.
FY 2016 proved to be an eventful year for fiscal policy though not necessarily for the better. Many longstanding issues were dealt on a permanent or longer-term basis, but usually they were done in a fiscally irresponsible way. As a new President and Congress prepares to step in about one-third of the way through FY 2017, we hope that the new fiscal year will see change for the better on deficits and debt.