Deficits to grow by $7.6 trillion over next 10 years

The Congressional Budget Office expects budget deficits to grow by $7.62 trillion between 2015 and 2024 despite a rise in tax revenue. That, according to updated budget projections released yesterday.

The nonpartisan fiscal research office expects budget deficits to hit $492 billion in 2014, or 2.8% of gross domestic product (GDP), and $469 billion in 2015 before beginning to rise again. By 2020, the budget deficit will hit $804 billion, or 3.5% of the economy.

The main drivers of federal spending are entitlements, known budget language as “mandatory spending” or “autopilot spending,” and debt service. These budgetary items will consume nearly 74% of the federal budget over the 10-year budget window.

Though tax revenues will eclipse $4.9 trillion, or 18.3% of GDP, by 2024, spending will continue to rise at an unsustainable pace. The federal government will spend nearly $6 trillion in that same year. The federal government will spend nearly $48.2 trillion over the course of this timeframe.

Added together, taxpayers will be hit with $7.62 trillion in budget deficits over the 10 year budget window. The share of the national debt held by the public will eclipse $20 trillion by 2024. This, despite higher than average tax revenues collected by the federal government.

The Congressional Budget Office warns of potentially dire consequences if federal lawmakers don’t act soon to deal with the threats to the United States’ long-term prosperity.

“Federal spending on interest payments would increase considerably when interest rates rose to more typical levels,” the Congressional Budget Office explains. “[H]igh debt means that lawmakers would have less flexibility than they otherwise would to use tax and spending policies to respond to unexpected challenges.”

“Finally, high debt increases the risk of a fiscal crisis in 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,” the agency added.


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