Moments ago, the Congressional Budget Office (CBO) provided a fresh reminder of Washington’s out-of-control spending. CBO updated its budget outlook with the following deficit and debt estimates:
- This year’s budget deficit = $642 billion
- FY2023 budget deficit = $895 billion
- Total deficits over the next decade = $6.34 trillion
- Gross federal debt in 2023 = $25.2 trillion
What Drives the Debt?
According to CBO’s outlook, revenue is projected to grow each and every year. In 2023, CBO predicts the federal government will collect nearly $5 trillion in tax revenue. The problem is out-of-control spending. By 2023, the federal government will spend at an annual rate of nearly $6 trillion. Washington is expected to spend close to $47 trillion over the next decade. Health-care-entitlement spending consumes nearly one-third of total government spending over the next decade.
The Consequences of Inaction
In testimony delivered earlier this year to the House Budget Committee, CBO Director Doug Elmendorf said the following:
“Federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. . . . Such high and rising debt would have serious negative consequences: When interest rates rose to more normal levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving, the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they might ordinarily to use tax and spending policies to respond to unexpected challenges. Finally, such a large debt would increase the risk of a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.”
CBO’s update can be read in full here.