CBO’s 2020 Economic Outlook Shows Trillion-Dollar Deficits Are Here To Stay | Citizens Against Government Waste

CBO’s 2020 Economic Outlook Shows Trillion-Dollar Deficits Are Here To Stay

The WasteWatcher

On January 28, 2020, the Congressional Budget Office (CBO) released its annual Budget and Economic Outlook for 2020 to 2030 and unsurprisingly, the United States’ fiscal outlook remains dreadful.

CBO estimates a 2020 deficit of $1 trillion, a $103 billion increase from January 2019.  Trillion-dollar deficits will remain and reach all-time highs by the end of the 10-year budget period.  From 4.6 percent in 2020, budget deficits will rise to 5.4 percent of gross domestic product (GDP) in 2030 and never dip below 4.3 percent of GDP.  Only during World War II has the debt remained above 4.0 percent of GDP for more than five consecutive years.

Total deficits over the decade will reach $13.1 trillion, raising the national debt to roughly $31 trillion by 2030.  Debt held by the public will increase from 79 percent of GDP in 2019 to nearly 98 percent of GDP by 2030, higher than any point since World War II.  Beyond the 10-year window, the federal debt would continue to grow, reaching a whopping 180 percent of GDP by 2050, a 30 percent increase compared to CBO’s 2019 projections.

CBO found that the primary culprit of these out-of-control deficits is all too familiar: unreasonably high federal spending.  While Congress’s insatiable appetite for discretionary spending is always concerning, the primary debt-driver is mandatory programs.  Over the next decade, mandatory program outlays are expected to rise by 5.4 percent annually on average.

CBO’s analysis suggests that rising debt and deficits would “pose significant risks to the fiscal and economic outlook” and “might cause lawmakers to feel constrained from implementing deficit-financed fiscal policy to respond to unforeseen events.”  There will be higher interest payments, dampened economic output, reduced household income, weaker capital stock, lower wages, an inability to respond properly to unexpected catastrophes, and worst of all, an increased likelihood of another financial crisis.

While blowing up spending caps and passing massive omnibus appropriations packages give taxpayers little confidence that Congress will turn things around, some on Capitol Hill are getting the message and sounding the alarm.  Several representatives have introduced legislation for a balanced budget amendment to the Constitution and others have fought for amendments to appropriation bills that would enact huge cuts to wasteful spending.  Unfortunately, those more aspirational proposals tend to go by the wayside in Washington.

However, a bipartisan solution in the Senate brings some hope for real reform.  Sens. Mike Enzi (R-Wyo) and Sheldon Whitehouse’s (D-R.I.) S. 2765, the Bipartisan Congressional Budget Reform Act, would implement several budget process changes like biennial budgeting, improved transparency, and enhanced enforcement and reconciliation rules that would help to control spending.  The bill has 22 cosponsors from both sides of the aisle.

On February 6, 2020, the House Republican Study Committee’s Government, Efficiency, Accountability, and Reform (GEAR) Task Force released its first report that made recommendations to reform government power structures, practices, and personnel policies.  Citizens Against Government Waste President Tom Schatz remarked at the event that with regard to the taxpayers’ money, Congress continues to say “let’s spend it and figure out what went wrong, rather then let’s spend it wisely in the first place and make sure it’s not being duplicated or being wasted.”

The second session of the 116th Congress can and should be the time where Washington restrains its chronic spending problem and prioritizes meaningful budget process reforms that will curtail, rather than exacerbate, a grim financial situation.

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