Deficits Expected To Hold Fairly Steady Until 2019
The CBO ("Congressional Budget Office") released a report titled "The Budget and Economic Outlook: 2015 to 2025" earlier today.
According to the CBO, the United States is expected to post a deficit of $468 billion in the 2015 fiscal year, down slightly from the $483 billion deficit that was posted last year. According to the CBO, a stronger economy will keep deficits at a relatively stable level (between $465 billion and $540 billion) between now and 2018.
Starting in 2019, the US deficit is expected to climb quickly, touching $652 billion in 2019 and eclipsing the $1 trillion mark ($1.088 trillion, to be exact) by 2025. The CBO forecasts that between 2016 and 2025, the United States will post a cumulative deficit of $7.641 trillion.
How will this impact the nation's public debt level?
By the end of the 2015 fiscal year, the United States is expected to have roughly $13.359 trillion in "debt held by the public". This is debt that is owned by foreign investors, US investors, hedge funds, pension funds, etc.
By 2025, this figure is expected to rise to over $21 trillion. Add this to "intragovernmental debt" (which is money that is owed to programs such as Social Security) and the United States will likely have a total debt load of around $30 trillion in ten years. With interest rates set to rise, the cost of servicing the nation's debt is going to rise dramatically.
Outlays are expected to increase from $3.656 trillion in 2015 to over $6 trillion in 2025, while revenues are expected to increase from $3.189 trillion to $5.029 trillion.
The strong rise in total outlays is going to be keyed by four main factors:
1) Baby boom generation retirement
2) Expansion of federal health insurance subsidies
3) Increasing health care costs per beneficiary
4) Rising interest rates on federal debt
Source: CBO.gov - The Budget and Economic Outlook: 2015 to 2025
Filed under: General Knowledge