Recent news stories have highlighted the good news that very near-term deficits are decreasing. That good news, unfortunately, will be short-lived. Though the economy continues its recovery and we have made some progress on deficits, those deficits will begin growing again soon, and major long-term fiscal challenges remain. In fact, in just two short years, by 2016, the federal government’s deficit will begin to rise again, according to CBO. Deficits increase in dollars and as a share of the economy: by 2024, they are projected to be almost $1.1 trillion — or 4 percent of gross domestic product. These deficits reflect a structural mismatch between revenues and spending.
Federal deficits under current law, 1999-2024
SOURCE: Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024, February 2014. Compiled by PGPF.
The Congressional Budget Office (CBO) warns that "such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis." For more, read our full analysis on CBO’s latest Budget and Economic Outlook report.