WASHINGTON—Earlier today, the Congressional Budget Office (CBO) released its annual Long-Term Budget Outlook, and it’s a pointed reminder that government spending is still out of control.
In response, House Budget Committee Chairman Paul Ryan said:
“CBO has posed an important question: Are we going to get control of the debt before it reaches a breaking point? The President and Congressional Democrats want to wish the problem away. But that’s simply irresponsible.
“The report reiterates the obvious: Government spending, especially on health care, is driving our debt. And Obamacare will not solve the problem. The law was a costly mistake. So we should replace it with real, bipartisan reforms.
“In the weeks ahead, I hope we work together to heed CBO’s warning. We must provide relief to the families we serve. We should start by delaying Obamacare and paying down the debt to help grow the economy.”
Key points from CBO’s Long-Term Budget Outlook:
A Large Debt Hurts Jobs — Debt held by the public is projected to grow rapidly as a share of the economy in the years ahead from 73 percent today to 100 percent in 2038. CBO warns that “the high and rising amount of [projected] debt . . . would have significant negative consequences for both the economy and the federal budget.”
Spending Drives the Debt — CBO projects that government spending will increase as a share of the economy from 20.8 percent today to 26.2 percent by 2038—a nearly 26 percent increase. The aging of the baby-boom generation, rising health-care costs, and Obamacare are “expected to steadily boost the government’s spending.”
Obamacare Won’t Help — The report warns that the President’s health-care law won’t stop the explosion in health-care costs. Mandatory spending on health care will increase by 74 percent from 4.6 percent of GDP today to 8.0 percent of GDP over the next 25 years. Over the next decade, Obamacare expansions will account for over half the growth in government spending on health care.
Higher Taxes Will Cost Jobs — CBO warns that if we raise taxes, as the President and his party’s leaders insist, our economy will hit the brakes. The report says higher tax rates “would discourage people from working and saving, further reducing output and income.”
Entitlement Reform Still Necessary — Entitlement programs—namely Social Security, Medicare, and Medicaid—and interest payments are driving our debt. CBO projects that government spending in these areas will consume 100 percent of total revenues by 2043.
The full report is available here.