In its February 2014 Budget and Economic Outlook, CBO continued its previous warnings from last year's February outlook and September's long-term outlook: elevated and rising debt level pose serious risks for economic growth and budget flexibility.
In its latest outlook, CBO highlights on page one the consequences of high levels of debt:
Yesterday, the Congressional Budget Office released its annual report on the federal budget, which outlines their projections of all federal spending and revenues over the next 10 years and serves as a baseline against which to measure all of this year's legislation. The report showed that the deficit is expected to fall by $166 billion since last year, from $680 billion in 2013 to $514 billion in 2014.
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 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.
Military personnel costs continue to increase as a share of the defense budget. One of the fastest growing components is military health care, where spending has outpaced even overall health care spending growth, according to the CBO. With base defense spending being reduced in recent years and through 2021, as a result of the Budget Control Act and sequestration, controlling health care spending will be important, or it will crowd out other defense priorities.
Today, the Congressional Budget Office released their score of the proposal from Majority Leader Harry Reid (D-NV) to renew extended unemployment benefits in concert with other reductions in spending.
CBO's Long-Term Budget Outlook contains significant amounts of helpful data on Social Security. However, a lot of the data focus on just the outlays of the program; by contrast, reformers tend to focus more on its overall finances and the state of the trust fund. Today, CBO published some additional information on Social Security, showing both the program's full finances and, importantly, the ranges of uncertainty in their projections.
Given the nature of debt ceiling politics lately, estimating when the federal government will start defaulting on obligations has become a common, multiple-times-a-year occurrence.
As the conferees met yesterday, any doubt that we can afford to wait on the long-term debt problem should have quickly been erased after CBO Director Doug Elmendorf's testimony to the conference committee. While the budget outlook has improved somewhat in the short term, little progress has been made on the long-term problem. And fixing the long term will likely require greater reforms to entitlement programs and the tax code.