The official budget watchdog of Congress issued its latest budget and economic forecast on Thursday, showing deficits and debt growing even higher than previously expected. It also repeated a now familiar warning that high and rising debt will negatively impact the economy, the country, and each of us.
The nonpartisan Congressional Budget Office (CBO) says that deficits are forecast to reach the $1 trillion mark in 5 years and the national debt will be 91% of the economy in ten years, which is well more than twice the average of the last 50 years. This year’s deficit is now projected to be $693 billion, which is more than $100 billion above last year’s deficit and higher than the prediction earlier this year. See our handy summary. And see a more detailed analysis from our partners at the Committee for a Responsible Federal Budget.
The new numbers also come with a renewed warning that rising budget deficits and national debt will ultimately damage the economy if something isn’t done. Specifically, CBO warns that economic growth will be slower and wages will be lower; it would be more difficult to respond to unexpected challenges; and we would be more vulnerable to a fiscal crisis.
The new numbers are very timely given the multitude of issues policymakers are considering that could push the debt in either direction. In addition to working on a federal budget and funding the government, Congress also has health care, tax reform, and the debt limit on the agenda. Members of Congress must keep these new figures in mind as they deliberate because the decisions they make on any of these policies could make the debt situation much better or much worse.
Fix the Debt Co-Chairs Ed Rendell and Judd Gregg called on Congress to act responsibly given the latest analysis. See their full statement.
We are entering uncharted waters. Debt has only been this high as a share of the economy one other time in our history—just after World War II. But unlike then, it is not projected to head back down. Instead, CBO confirms it is rising rapidly without end toward record levels.
With deficits rising at alarming speeds, Congress needs to start applying the brakes, not stepping on the gas.
Our debt cannot remain on its current path, and the longer we wait for a comprehensive plan, the graver the choices become. Rising debt will slow wage growth, increase interest spending, limit flexibility to respond to new challenges, and diminish policymakers’ ability to invest in the economy and maintain the social safety net.
We urge Congress to immediately put together a plan to address our unsustainable debt and not pursue policies like huge unpaid for tax cuts that will only make the problem worse.
There is no free lunch. The choices are hard and will take real leadership, but the good news is it can be done. With pro-growth tax reform and policies to shore-up our unsustainable entitlement programs, we can put the debt back on a downward path and unlock our economy for future generations instead of saddling them with mountains of debt.
Congress cannot ignore the constant warnings forever. Please urge your representatives to follow the advice of Governor Rendell and Senator Gregg to act now by writing Congress today.
And have a hand yourself at tackling these choices with the new Debt Fixer interactive budget tool.
National Debt and You