The Congressional Budget Office (CBO) has released news about our debt future. Deficit projections are set to rise over the next decade and these CBO forecasts should prompt serious action by our political leaders to control our debt.
President Obama cheered the fact that the deficit dropped at the fastest rate in history, going to $514 billion in 2014 from $1.4 trillion in 2009. We can applaud this drop while still drawing attention to the pressing problems underlying such objectively large deficits. Think about it this way, if a lumber company wipes out an entire forest one year, but only chops down half of a forest the next, it’s unlikely we would say they’d become environmentalists the second year. It’s important to keep in mind that these reduced deficits are because of the massive highs in previous years.
According to the CBO, the deficit would rise from 3.2 percent of GDP in 2016 to 3.6 percent in 2017, the total deficit estimate reached $693 billion. It is projected to continue rising, reaching 5.2% of GDP in 2027.
While spending money we don’t have is the chief concern for rising deficits over the next decade, which programs we are spending the money on is of greater importance. CBO consistently cites Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies for health insurance in the exchanges as the most culpable programs driving the expanding deficits. Simultaneously, interest on the debt is expected to triple from about $300 billion to $800 billion over the next decade.
Such spending is termed “mandatory” because each year these programs’ outlays are set by a formula that rises on autopilot. Without policy changes by Congress to curb mandatory spending, we risk the very existence of these programs and our ability to pay for anything else. Interestingly, defense spending and benefit programs other than the ones listed above are actually expected to go down some over the same time, though recent developments overseas call this expectation into question.
Where Do We Go From Here?
Entitlements remain a grave problem for our nation’s fiscal stability. Tinkering around with agriculture subsidies and Amtrak funding may be more politically palatable than reforming federal health and retirement programs, but the quickly approaching solvency crisis of the latter should help to highlight the importance of such entitlement reform.
CBO reports on the deficit illustrate the very real crisis facing the country, and before long, tough choices will have to be made. This means redesigning entitlement benefits, consolidating bureaucracies, block grant programs for the states, and seeking non-governmental alternatives to retirement and healthcare. Such fiscal decisions over the next ten years have no viable alternative, and this CBO projection emphasizes the need for serious reform to the major drivers of spending.