In the Congressional Budget Office (CBO)’s revised Budget and Economic Outlook for 2017-2027, which was released on Thursday, it raised deficit figures “over the 10-year period from 5 percent of GDP by 2027 to 5.2 percent,” blaming out-of-control spending on mandatory programs.
According to its data, the CBO concluded:
“The projected rise in deficits would be the result of rapid growth in spending for federal retirement and health care programs targeted to older people and to rising interest payments on the government’s debt, accompanied by only moderate growth in revenue collections.”
In an opinion piece published in The Hill on Tuesday, Jack Salmon, a D.C.-based researcher focused on federal fiscal policy, pointed out that “the federal government does not have a revenue problem, but a spending problem.”
Salmon stated that this is a bi-partisan issue, noting, “The last time a federal budget surplus was recorded was in 2001.”
He went on to say that the CBO projections reveal an uncomfortable fact: “Deficits are now the norm and the level of federal debt held by the public will continue to mount as the interest on that debt eats ever-larger amounts of the federal budget.”
Current trends predict that the level of debt held by the public will reach roughly $15 trillion by the end of 2017, and continue to rise to $25 trillion by 2027. Salmon explained, “Most of this growth in spending is in mandatory spending, which is on track to reach almost 80 percent of total federal spending over the next decade.”
Calling it “the end of fiscal democracy,” he revealed that by the time 2027 rolls around, only 20 percent of the federal budget will be decided on by lawmakers; the rest is just going to grow all by itself.
“The economic impacts of an ever-increasing national debt will be crippling for future generations, with federal debt held by the public to surpass 90 percent of GDP in the coming decade. As federal borrowing reduces national savings over time, the nation’s capital stock will ultimately be smaller, meaning that both productivity and income will be lower than would be the case if the debt was smaller,” he predicted.
Salmon went on to warn of a looming financial crisis in the United States, which percolates dangerously as investors get increasingly nervous about backing the government’s out-of-control spending habits.
“Policymakers must recognize this problem for what it ultimately is: a spending problem,” he said. “Until this problem is properly addressed, we can expect years of economic stagnation ahead.”
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