Last July, President Trump signed off on a bipartisan budget deal to bust the spending caps set by the Budget Control Act of 2011 (BCA) by $323 billion. The BCA was long seen as the Tea Party’s most significant legislative legacy.
After all that, the Congressional Budget Office (CBO) has finally come out with its new 10-year projections.
Among them is an average $1.3 trillion deficit (difference between revenue collected and expenses disbursed) every year for the next 10 years that bottoms out at $1.7 trillion by 2030; an 83 percent increase in debt held by the public, totaling $31.4 trillion; and an increase in debt held by the public as a percentage of GDP to 98 percent.
During the first four years of President Obama’s tenure, annual deficits exceeded $1 trillion each year. However, the budget deficit was cut drastically during the final four years of the Obama administration as provisions enacted in the Budget Control Act resulted in discretionary spending reductions and what was known as the “sequester.”
By 2050, CBO projects public debt will amount to 180 percent of the country’s GDP.
The analysis also assumes the 2017 tax cuts will expire after its current 10-year lifespan.
A large driver of the increasing debt is non-discretionary spending, often referred to as “entitlement spending” or mandatory spending. This includes programs such as Social Security, Medicare, and Medicaid.
During the next decade, the shortfall between Social Security and Medicare will increase from $440 billion to $1.87 trillion by 2030.
Meanwhile, the CBO’s projections across the same time frame predict unemployment to rise above four percent and real GDP growth (growth accounting for inflation) to drop below two percent.
Politicians and presidents in both parties have chosen to spend more and more as the years have gone by, essentially borrowing money from future generations. The national debt doubled under President George W. Bush and doubled again under President Barack Obama.
Currently, the United States sits more than $23 trillion in debt with every citizen owing nearly $70,000 to the federal government.
With the demise of the BCA budget caps and no actionable proposal to rein in so-called “entitlement spending,” the CBO’s new report suggests that massive debt and deficits appear to be the new normal.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.