Federal budget shortfalls are projected to rise substantially through the next decade, more than doubling to $960 billion by 2024, forcing higher federal spending on interest payments and limiting lawmakers’ flexibility to deal with fiscal challenges, congressional auditors warned Wednesday.
“Such high and rising debt would have serious negative consequences for both the economy and the federal budget,” warns the new report from the Congressional Budget Office, providing an update on the nation’s economic outlook.
The main causes? A rise in Social Security spending for an aging population, by almost 80 percent through 2024; expansion of federal subsidies for health insurance, by almost 85 percent; and the growing interest payments on federal debt.
These grim projections come despite what the report says is a federal deficit that, for now, is still declining. But that will soon change.
The budget deficit at the end of fiscal 2014 (which comes on Sept. 30) is estimated to be $506 billion, roughly $170 billion lower than the 2013 shortfall.
CBO does predict that economic growth will pick up in the next few years and that increased hiring will bring the unemployment rate down.
And relative to the size of the economy, this year’s deficit””at 2.9 percent of the gross domestic product””will be slightly below the average of the past 40 years; this is the fifth consecutive year in which the deficit has declined as a percentage of the gross domestic product since peaking at 9.8 percent in 2009.
At the same time, however, the debt held by the public will increase for the seventh year in a row, reaching 74 percent of GDP””the highest ratio since 1950. And according to CBO, federal debt under existing spending policies will rise to 77 percent of GDP by 2024, roughly twice the 39 percent average of the past four decades.
Along with causing federal spending on interest rates to rise, the report says “the large amount of debt might restrict policy makers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises.”
“Finally, continued growth in the debt might lead investors to doubt the government’s willingness or ability to pay its obligations, which would require the government to pay much higher interest rates on its borrowing,” the report warns.
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Under pressure from a judge, the State Department will release about 550 of Hillary Clinton’s emails—“roughly 14 percent of the 3,700 remaining Clinton emails—on Saturday, in the middle of the Presidents Day holiday weekend.” All of the emails were supposed to have been released last month. Related: State subpoenaed the Clinton Foundation last year, which brings the total number of current Clinton investigations to four, says the Daily Caller.
UPDATED: Sen. Jim Webb (D-VA) will not be playing the role of Ralph Nader in this year’s election. Speaking in Dallas today, Webb said, “We looked at the possibility of an independent candidacy. Theoretically, it could be done, but it is enormously costly and time sensitive, and I don’t see the fundraising trajectory where we could make a realistic run.”
“The leaders of the Republican and Democratic national committees on Wednesday weighed in on the prospect of an independent presidential run by” former New York City Mayor Michael Bloomberg (I). “DNC Chairwoman Debbie Wasserman Schultz suggested that the former New York City mayor’s priorities are already ‘well cared-for’ in the Democratic platform, while RNC leader Reince Priebus welcomed the idea, saying Bloomberg would siphon off votes from the Democratic candidate.”
Three hundred fifty-two, thanks to superdelegates pledged to Clinton, and the vagaries of the delegate allocation process in early states. Not bad, considering her results have been a virtual tie and a blowout loss.