If you \u200cthink our current fiscal\u200b situation, with $2 trillion deficits, looks bleak, the recent Congressional Budget Office (CBO) outlook for the years\u200d ahead has news for\u2064 you: You\u2062 ain\u2019t seen nothing yet.<\/p>\n

As it\u200d has for many years, \u200cthe document<\/a> shows a\u200b fiscal situation slowly spiraling out\u2063 of control. And while \u200csome have tried \u2063to put a positive spin\u2063 on \u2064things by claiming the\u2062 situation is\u2062 \u201cbetter\u201d (really just\u2064 slightly\u200d less bad) than last\u2064 year, Congress \u2064is soon poised\u200d to make the \u2062situation worse by passing yet another spending blowout in \u200bthe weeks ahead.<\/p>\n

Historic Deficits and Debt<\/strong><\/h2>\nExcluding the effects of various timing shifts, CBO projects the \u2062deficit will total \u2062\u201conly\u201d about $1.6 trillion in\u2063 the fiscal year ending \u2062Sept. 30. That\u200d deficit amounts \u200cto 5.6 percent of the size of the economy. The \u2063 budget office forecasts<\/a> that deficits will remain above 5 percent\u2062 of GDP for\u200d the next decade. And \u2062no, this level of red\u2064 ink is NOT normal:<\/p>\n
\n
The deficits \u2062that CBO projects are\u200c large \u2064by historical standards.\u2063 Over the past 50\u2062 years, the annual deficit has averaged 3.7 percent\u2062 of GDP.\u200d In CBO\u2019s projections, deficits equal or exceed 5.2 percent of GDP in every year from \u200b2024 to\u200b 2034. Since at least 1930, deficits \u200bhave\u2064 not\u200b remained that large for more than five years in a row.<\/p>\n<\/blockquote>\n
Remember too\u2064 that CBO\u2019s projections assume\u2062 all the income \u2062tax reductions included in the 2017 tax law \u2064expire at the end of next year, as\u200b scheduled. In other words, CBO is projecting historically large deficits even \u2063after one of the largest tax increases<\/a> in American history \u200ctakes effect<\/em> in 2026.<\/p>\n
Why the persistently high deficits? Two \u200bmajor reasons lie \u200cin the Covid spending binge. That \u2064pandemic spending 1) increased our overall \u2064debt and 2) \u200cforced the\u2063 Federal Reserve\u200c to \u2063raise interest\u2064 rates to combat the inflation all this spending wrought. A CBO chart makes clear the dramatic\u200c increase in\u2062 federal deficits over the last few years, \u200dalong with the record-high amounts we are projected to spend on interest\u200b rates in the\u200c coming decade:<\/p>\n
<\/figure>\n
As of this fiscal year, net interest costs will exceed the \u200dentire defense discretionary budget. In other words, we will spend more dollars \u2064paying off\u2063 prior years\u2019 spending\u200b than we will to\u200d keep \u200cour country safe from today\u2019s threats. If that\u2019s not a threat to Americans\u2019 security, I don\u2019t\u2064 know what is.<\/p>\n
<\/div>\n
But even\u2062 apart from interest costs, the primary deficit \u200d\u2014\u200c that is, the deficit in the current fiscal year, without counting interest costs \u2064to\u2062 pay off\u200d prior years\u2019 debt \u2014 remains \u200bhistorically high. And that \u200cdeficit remains high not because\u2063 projected revenues shrink, either. As another CBO chart \u200cdemonstrates, large deficits persist because government spending remains\u2062 well above\u200c historical averages, \u200cdue in large part to ever-growing spending on \u200dmandatory programs\u2064 like Social Security,\u2062 Medicaid, \u200cand Medicare:<\/p>\n
<\/figure>\n
\u2018Improvement\u2019 Is\u200d a Mirage<\/strong><\/h2>\nAt this \u200cpoint, some might recall that House \u2062Republicans \u200cgot President \u2063Biden\u2063 to agree to a debt limit bill<\/a> \u200clast spring<\/a> that (theoretically) curbed\u200c spending. Won\u2019t that help the situation?<\/p>\n
In\u200d theory, it would if Republicans actually stuck to the agreement. But Republicans \u200chave already said they don\u2019t want\u200c to stick \u200bto the agreement<\/a>, which\u2063 is why House \u200cSpeaker Mike Johnson, \u2064R-La., cut his (bad) \u200bspending deal<\/a> with Biden earlier this year.<\/p>\n
Because the budget office has to assume \u200bthe continuation of current \u200dlaw and policies, the deficit estimates\u200c above assume \u200cthat spending caps included in the budget agreement remain. \u2063But if \u2014 more like when \u2014 Congress busts \u2062through the caps to pass spending bills in\u2063 March \u200bat higher\u2063 levels than\u200c the caps, fund additional military\/foreign aid, or both, much if\u2064 not all of the supposed \u2064$2.6 \u2064trillion in projected\u200d deficit reduction from caps in the debt limit bill will evaporate.<\/p>\n
<\/div>\n
And when that does happen, \u2063the fiscal\u2064 situation will \u200dbecome not just worse than CBO\u2019s\u200d estimates this year, but\u200d worse than \u200bCBO\u2019s projections from last year. Since\u200c releasing its last round of estimates in May, the budget office raised the projected deficit effects of economic and technical\u200d changes to the budget. Those changes include things \u200dlike higher\u200c interest rate costs, as well as\u200b the Biden administration\u2019s unilateral actions that expanded\u2064 student \u201cloan\u200b forgiveness\u201d and raised \u200dthe cost of \u201cgreen\u201d pork\/subsidies to $1 trillion<\/a>.<\/p>\n
Only the supposed\u200d savings from \u2062the spending caps have\u2063 prevented the $1.3 trillion in higher costs from the economic and\u2063 technical changes from \u2062worsening the \u200dfederal government\u2019s\u200c financial position. When those spending cap savings \u200bevaporate, like most \u2064other \u201csavings\u201d Congress claims to enact, projected deficits will rise even higher.<\/p>\n
One hopes that seeing \u200cthe numbers in the CBO report will prompt members of Congress to rethink their strategy of \u2063busting\u2062 through the\u200d spending \u2064caps they negotiated just\u200c last spring. Even if they don\u2019t, however, events will soon force \u200dlawmakers\u2019 hands. But because Washington seems insistent on controlling \u2063spending the\u200b hard way, quite possibly via a debt crisis causing dramatic\u200d disruption\u200b to \u200bour economy, rather \u2064than \u2062the easy way, the American\u2063 people will end up much worse off.<\/p>\n
<\/div>\n
\t\t\t\t\t \t\t\t\t\t\t\t\t\t<\/div>\n
\u200d rnrn <\/p>\n
What \u200cfactors have contributed to the persistently high deficits in the United States?<\/h2>\n
<\/p>\n
\n
The Continuing Crisis: America’s Growing Deficits and Debt<\/h1>\n
If you\u2064 think our current fiscal situation, with $2 trillion \u200ddeficits, \u2063looks bleak, the recent Congressional Budget Office \u200d(CBO) outlook for the years ahead has news for \u2063you: \u200dYou ain’t seen nothing yet.<\/p>\n
As it \u200bhas \u2064for many years, the CBO document\u200c shows a fiscal situation slowly spiraling out \u2063of control. And while \u200dsome have tried to put a positive\u2062 spin on things\u200d by \u2063claiming the situation is “better” (really just slightly less bad)\u200d than last year, Congress is soon poised to make the situation worse by passing yet another spending blowout in\u200c the\u200b weeks ahead.<\/p>\n
Historic Deficits and Debt<\/h2>\n
Excluding the effects \u2062of various timing shifts, CBO\u200d projects the\u200d deficit will total “only”\u200b about $1.6\u2062 trillion\u200c in the fiscal year ending Sept. 30. That deficit amounts to \u200b5.6 percent of the size of the economy. The budget office \u2063forecasts that deficits will remain above 5 percent of GDP for the next decade. And no, this level of\u200d red ink \u2064is NOT normal:<\/p>\n
The deficits that CBO projects are large by\u200d historical standards. Over the past 50 years, the annual deficit \u200bhas averaged 3.7 percent of GDP. \u2062In CBO\u2019s projections, deficits equal or exceed 5.2 percent\u200d of \u200bGDP\u2063 in \u2064every year from 2024 to 2034.\u2063 Since at least\u2062 1930, deficits have not remained that \u200clarge for more than five years in a row.<\/p><\/blockquote>\n
Remember too that CBO\u2019s projections\u2063 assume all the \u2064income tax\u2063 reductions included in the 2017 tax law \u2064expire at the end\u2062 of\u200d next year, as scheduled. In \u2063other words, CBO is projecting historically\u200c large deficits \u200beven after\u2063 one\u2063 of the \u2064largest\u200d tax increases\u200d in\u200b American history takes effect in 2026.<\/p>\n
Why the \u200bpersistently\u200c high deficits?\u2064 Two \u200cmajor\u2062 reasons lie in the Covid spending binge. That pandemic spending 1) increased our overall \u200cdebt and 2) forced the Federal Reserve to raise interest rates to combat the inflation all\u2062 this \u2064spending wrought. A CBO chart makes clear the dramatic increase in federal deficits\u2064 over the last few years, along with the record-high amounts we \u200dare projected\u2064 to spend on interest rates in the coming decade. As of this \u2063fiscal year, net interest costs will exceed the entire defense discretionary budget. In other words, we will spend more dollars paying off prior years\u2019 \u200bspending than we will to keep our country safe\u2062 from today\u2019s \u2063threats. If \u200cthat\u2019s not a \u200bthreat to \u200bAmericans\u2019 security, \u200dI don\u2019t know what is.<\/p>\n
But even \u200dapart from interest costs, \u200cthe primary \u2062deficit\u2062 \u2013 that is, \u2062the deficit\u2064 in the current \u200cfiscal year, without counting interest costs to pay off prior years\u2019 \u200ddebt \u2014\u2063 remains historically high.\u2062 And\u2064 that deficit\u200b remains high \u200dnot because projected\u2064 revenues shrink, either. As\u2063 another CBO chart demonstrates, large deficits persist because government spending remains well above historical \u200baverages, due in large part to ever-growing spending\u200d on mandatory programs\u2064 like Social Security, Medicaid, and\u2062 Medicare.<\/p>\n
\u2018Improvement\u2019 Is\u2062 a Mirage<\/h2>\n
At this point, some might recall that\u2063 House Republicans got\u200b President \u200dBiden \u200cto agree\u2064 to a debt limit bill last spring\u200c that (theoretically) curbed spending. Won\u2019t\u200c that help the situation?<\/p>\n
In \u2064theory,\u2063 it would if Republicans actually \u200cstuck to the agreement.\u200d But Republicans have already said\u200d they don’t want to stick to the agreement, which is \u200bwhy House Speaker Mike Johnson, R-La., cut \u2062his (bad) spending deal with \u200dBiden earlier this year.<\/p>\n
Because \u200bthe budget office \u2062has to assume the\u2063 continuation of\u200b current law and \u200cpolicies, the deficit estimates above assume that spending\u200b caps included in the\u200c budget agreement remain. But if \u2014 more like\u200c when \u2014 Congress busts\u2064 through the caps to pass spending bills in March at higher levels than the caps, fund\u200b additional military\/foreign \u200daid, or both, much if not\u200c all of\u200c the supposed $2.6 trillion in projected deficit reduction from \u2062caps in the deb<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
If you believe our $2 trillion deficits are concerning, brace yourself for the Congressional Budget Office’s (CBO) outlook. It reveals a worsening fiscal situation, spiraling out of control. Despite attempts to address it, the document depicts a bleak future ahead<\/p>\n","protected":false},"author":521,"featured_media":2176897,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/02\/emil-kalibradov-K05Udh2LhFA-unsplash.jpeg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[],"class_list":["post-2176896","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/02\/emil-kalibradov-K05Udh2LhFA-unsplash.jpeg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2176896","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2176896"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2176896\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2176897"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2176896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2176896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2176896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}