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CBO: Long-Term Deficits And Debt “Unsustainable”

- February 4, 2014

DEFICITS WILL BEGIN TO ACCELERATE AFTER 2015, INCREASING THE DEBT TO $26 TRILLION BY 2024

Publicly Held Debt Is Expected To Reach Over 110 Percent Of GDP By 2038, Equaling The Percentage After WWII. “As a result, public debt would reach roughly 110 percent of GDP by 2038, CBO estimates, about equal to the percentage just after World War II.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

  • CBO: “Such An Upward Path Would Ultimately Be Unsustainable.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

After FY 2015, Deficits Are Expected To Increase Faster Than GDP Due To Aging Population, Expansion Of Health Insurance Subsidies, Increased Health Costs, And Increased Interest Cost On The Debt. “After that, however, deficits are projected to start rising—both in dollar terms and relative to the size of the economy—because revenues are expected to grow at roughly the same pace as GDP whereas spending is expected to grow more rapidly than GDP. In CBO’s baseline, spending is boosted by the aging of the population, the expansion of federal subsidies for health insurance, rising health care costs per beneficiary, and mounting interest costs on federal debt.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

  • Despite A Reduction In The Short Term, Deficits Are Expected To Be Back Over $1 Trillion A Year By 2024. “CBO sees the deficit sliding to $478 billion next year before beginning a steady rise years through 2024 that would bring deficits back above $1 trillion a year.” (Andrew Taylor, “New Report: Budget Deficit To Drop To $514b,” Associated Press, 2/4/14)

By 2024, CBO Estimates The Federal Debt Will Be $26 Trillion Dollars. “By 2023, the gross debt of the United States will be $26 trillion, up from a projected $25 trillion. A year later the debt will rise to $27 trillion as the $1.074 trillion deficit for fiscal 2024 is added in.” (Eric Wasson, “CBO: O-Care Slowing Growth,” The Hill, 2/4/14)

  • CBO: “Deficits Are Now Projected To Be About $1 Trillion Larger” Than Previously Estimated. “The baseline budget outlook has worsened slightly since May 2013, when CBO last published its 10-year projections.  At that time, deficits projected under current law totaled $6.3 trillion for the 2014–2023 period, or about 3 percent of GDP. Deficits are now projected to be about $1 trillion larger.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

CBO: “The Large Budget Deficits Recorded In Recent Years Have Substantially Increased Federal Debt, And The Amount Of Debt Relative To the Size of The Economy Is Now Very High By Historical Standards.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

THE REMAINDER OF OBAMA’S TENURE IN OFFICE WILL ALSO BE MARKED BY SLUGGISH GROWTH AND FEWER ECONOMIC OPPORTUNITIES

GDP Is Expected To Remain Below Historic Standards For The Next Three Years. “By the second half of 2017, CBO projects, real GDP will return to its average historical relationship with potential (or maximum sustainable) GDP, which implies that GDP will be slightly below its potential.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

  • GDP Growth For 2014 Was Revised Down By The CBO To 3.1 Percent From 3.3 Percent. “CBO also estimated the U.S. economy will grow by 3.1% in 2014, down from the agency's prior estimate of 3.4%.” (Robert Schroeder, “CBO Cuts 2014 Deficit Estimates By $46 Billion,” The Wall Street Journal’s Market Watch, 2/4/14)

CBO: “CBO Estimates That The Economy Will Continue To Have Considerable Unused Labor And Capital Resources (Or ‘Slack’) For The Next Few Years.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)

According To The CBO, The Declining Labor Force Participation Rate Has Been Due To A Lack Of Job Opportunities And Will Only Recover Slowly. “The labor force participation rate (the percentage of people in the civilian noninstitutionalized population age 16 or older who are either working or are available for and actively seeking work), which has been pushed down by an unusually large number of people deciding not to look for work because of a lack of job opportunities, will move only slowly back toward the level it would be without the cyclical weakness in the economy.” (“The Budget And Economic Outlook: 2014 To 2024,” The Congressional Budget Office, 2/4/14)


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