The nation is doomed to return to trillion-dollar shortfalls by 2024 if lawmakers don’t alter existing tax and spending policies, congressional auditors warned on Monday.
The culprits? Rising health care costs, an aging population, growing interest payments on federal debt, and an expansion of federal subsidies for health insurance, according to the Congressional Budget Office.
This rising debt would have serious consequences, CBO warns. Federal spending on interest payments would increase considerably, and lawmakers would have less flexibility to use tax and spending policies to respond to unexpected challenges.
“Finally, high debt increases the risk of a fiscal crisis in which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates,” the report states.
Despite the grim tidings, congressional Democrats seized optimistically on a smaller aspect of the report: that the federal government’s subsudies for the health care exchange premiums under the Affordable Care Act will be lower than previously projected.
CBO found that because the exchange premiums themselves will cost less, the government’s share of those will amount to about $1.032 trillion between 2015 and 2024 — $104 billion less than previously projected.
The news comes during a time when the U.S. has made a deep dent in its deficit. The federal deficit lingered above $1 trillion from 2009 to 2012, reaching higher than $1.4 trillion in 2009 amid the recession. But the shortfall dropped to $680 billion in fiscal 2013. And CBO’s latest projections Monday show the deficit continuing to drop to $492 billion this fiscal year and then to $469 billion in 2015.
CBO also notes that 2014 would be the fifth consecutive year in which the deficit has declined as a share of gross domestic product, since peaking at 9.8 percent in 2009 — a year in which government spending was revved up to help stimulate the economy.
Relative to the size of the overall economy, the $492 billion deficit for fiscal 2014 — at 2.8 percent of GDP — will be nearly a third less than the $680 billion shortfall in fiscal 2013, which was equal to 4.1 percent of GDP.
But after 2015, CBO says that it will start to rise and could reach $1 trillion in 2022 through 2024.
CBO’s figures are known as “baseline projections,” showing what would happen to the federal budget if current laws remained in place. They are designed to give Congress a benchmark against which to measure the effects of proposed spending and taxes.
“The latest budget numbers show that while we are experiencing a temporary improvement to our deficit problems, long-term debt trends remain very troubling,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt. “What’s more, the numbers will likely be even worse after 2024 if we don’t take action soon on tax and entitlement reform.”
“The analysis makes it clear that this is no time to put new policies on the nation’s credit card or use phantom savings,” she added. “Instead of patting themselves on the backs for modest improvement in the near term, policymakers should be using this period of relative calm to make real progress on our long-term fiscal challenges.”
Meanwhile, Senate Budget Committee Chair Patty Murray, in a statement, honed in on CBO’s findings that the cost of the government subsidies tied to exchange premiums under the Affordable Care Act will fall by $104 billion over 10 years. The report also projected that 25 million people will buy insurance through those exchanges by 2017, an increase of about 1 million over its earlier projection.
“Today’s CBO update shows once again that the Affordable Care Act will help reduce our deficits while offering more Americans access to quality, affordable health care,” Murray said. “We need to keep building on this progress.”
What We're Following See More »
Special counsel Robert Mueller "is now demanding documents from the department overseeing his investigation." A source tells ABC News that "Mueller's investigators are keen to obtain emails related to the firing of FBI Director James Comey and the earlier decision of Attorney General Jeff Sessions to recuse himself from the entire matter."
"President Donald Trump would not insist on including repeal of an Obama-era health insurance mandate in a bill intended to enact the biggest overhaul of the tax code since the 1980s, a senior White House aide said on Sunday. The version of tax legislation put forward by Senate Republican leaders would remove a requirement in former President Barack Obama’s signature healthcare law that taxes Americans who decline to buy health insurance."
"Members of Congress with histories of mistreating women should be extremely nervous. Major outlets, including CNN, are dedicating substantial newsroom resources to investigating sexual harassment allegations against numerous lawmakers. A Republican source told me he's gotten calls from well-known D.C. reporters who are gathering stories about sleazy members."
"Christopher Steele, the former British intelligence officer who wrote the explosive dossier alleging ties between Donald Trump and Russia," says in a new book by The Guardian's Luke Harding that "Trump's land and hotel deals with Russians needed to be examined. ... Steele did not go into further detail, Harding said, but seemed to be referring to a 2008 home sale to the Russian oligarch Dmitry Rybolovlev. Richard Dearlove, who headed the UK foreign-intelligence unit MI6 between 1999 and 2004, said in April that Trump borrowed money from Russia for his business during the 2008 financial crisis."