An already grim fiscal outlook grew worse in the Congressional Budget Office’s (CBO) update to its Budget and Economic Outlook for 2019 to 2029.

CBO estimates a 2019 deficit of $960 billion, a $64 billion increase from its May projection.  Trillion-dollar deficits will resume in 2020, two years earlier than expected, and will reach all-time highs by the end of the 10-year budget period.  From 2020-2029, deficits are projected to average 4.7 percent of gross domestic product (GDP).  The average over the past 50 years was 2.9 percent of GDP.

In total, deficits will rise to $12.2 trillion, up $809 billion since CBO’s update in May.  Debt held by the public will increase from 79 percent in 2019 to 95 percent by 2029, higher than any point since World War II and more than twice the average over the last 50 years.

According to CBO, the primary cause of these alarming increases is the Bipartisan Budget Act (BBA) of 2019.  The BBA increased spending caps by $322 billion over the next two years and ended automatic spending cuts established by the 2011 Budget Control Act.  The BBA will add approximately $1.7 trillion to the deficit over the next 10 years.  While lower interest rates help offset some of the cost, no other piece of legislation, since May, is within $1.4 trillion of the BBA’s price tag.

“The significant increase in federal borrowing would elevate the risk of a fiscal crisis and would limit lawmakers’ ability to adopt deficit-financed fiscal policies to respond to unforeseen events,” states the report. “To put debt on a sustainable path, lawmakers will have to make significant changes to tax and spending policies.”

CBO’s update comes amid growing fear that another recession could be right around the corner.  Bond markets have exhibited an inverted yield curve, an ominous predictor of fiscal disasters, and economic growth projections around the world have significantly slowed.  “It’s been 50 years and 7 recessions with a perfect record,” said economist Arturo Estrella, discussing the inverted yield curve. “I’d say the chances of a recession in the second half next year are pretty high.”

Economists from both sides of the aisle have argued that an economic downturn is looming and CBO’s numbers should only further alarm taxpayers.  Fortunately, there are solutions available to cut wasteful spending like CAGW’s Prime Cuts, that would save $3.1 trillion in spending over five years.  Instead of punting the issue further down the road, the time is now for Washington to curtail its chronic spending problem.