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The 2016 Long-Term Budget Outlook

July 12, 2016
By Congressional Budget Office

This report, published by Congressional Budget Office, a nonpartisan independent federal government agency, uses current spending and revenue trends to project future economic and fiscal indicators.

This report, published by Congressional Budget Office, a nonpartisan independent federal government agency, uses current spending and revenue trends to project future economic and fiscal indicators.

CBO writes that, if current laws remain generally unchanged, the United States will face steadily increasing federal budget deficits and debt over the next 30 years, and will reach the highest level of debt, relative to gross domestic product, (GDP) ever experienced.

“Over the past several years, federal budget deficits have steadily declined as the nation recovers from the financial crisis and 2007-2009 recession,” CBO wrote. “However, the Congressional Budget Office projects that the budget deficit will rise this year. And if current laws generally remain unchanged, budget deficits as a share of the nation’s output—its gross domestic product—will grow over the next decade. As a result, federal debt held by the public would rise from its already high level— from 75 percent of GDP today to 86 percent by 2026, CBO projects. Beyond the next 10 years, the long-term budget outlook is projected to worsen further, with debt reaching 141 percent of GDP in 2046—the highest ever recorded.”

CBO identifies federal entitlement programs, such as Social Security and Medicare, as a primary driver of the predicted record-setting debt levels.

The government’s spending for Social Security and Medicare is a crucial factor in that outlook. Those programs benefit mostly the elderly, a group that has grown significantly and will continue to do so. Rising healthcare costs per person also will boost Medicare outlays. Therefore, spending for those programs is projected to rise substantially in the coming decades. By 2046, projected spending for those programs, as well as Medicaid spending, for people 65 or older accounts for about half of all federal noninterest spending.”