The Congressional Budget Office (CBO) isn't the only agency in town that does long-term projections. The Treasury Department annually releases the Financial Report of the United States Government, which shows a number of different measures of the federal government's fiscal health both in the past fiscal year and over the next 75 years. That report shows the U.S. government has over $56 trillion of unfunded liabilities over the next 75 years.
CBO's recent budget projections show a much deteriorated budget outlook, with debt now rising faster over the coming decade than previously anticipated. Their projections, of course, are based a number of assumptions, including assumptions about future policy. Were Congress to make different policy choices than CBO assumes, debt numbers could change significantly.
Yesterday, the Congressional Budget Office released its 2014 Budget and Economic Outlook, serving as a budget baseline for the new year. To help make sense of the 182-page dense but informative report, CRFB has released a concise 7-page analysis that puts the new numbers in perspective.
The CBO's baseline released today shows how spending is expected to grow over time and where that growth occurs in the federal budget. In general, spending grows from 20.8 percent of GDP in 2013 to 22.4 percent by 2024. However, different categories of spending have much different fates within the overall total.
The Super Bowl was held last Sunday, and the Olympics are coming up in a few days, but the biggest event this week happened today as CBO released its latest budget and economic projections for the next ten years. The odd scheduling of budget projection releases last year meant that there was no August update of the baseline, as there usually is, so these are the first projections in almost nine months.
In our recent paper, "Our Long-Term Debt Problems are Very Far From Solved," we showed that while the debt problem may be long-term, solutions need to start today.
Yesterday, Former Treasury Secretary and director of the National Economic Council Larry Summers argued that “budget deficits are now a second-order problem” and the focus should instead be on economic growth. Although the piece is in many ways insightful, it could perpetuate the myth in Washington that our debt problems are either solved or are no longer a pressing concern.