Four Key Takeaways from the CBO 2018 Long-Term Outlook
Last Updated June 26, 2018
Today, the nonpartisan Congressional Budget Office (CBO) released its 2018 Long-Term Budget Outlook, highlighting the significant fiscal challenges facing our nation.
Here are four key takeaways from our analysis of the report:
1. Federal debt is already at its highest level since 1950 and is projected to climb to 152 percent of GDP under current law by 2048 — by far an all-time high.
2. Rising debt is the result of a structural imbalance between revenues and spending. Under current law, spending growth, which is fueled primarily by the aging of the population, rising healthcare costs, and mounting interest payments will significantly outpace the projected growth in revenues.
3. As the debt grows and interest rates rise, interest costs are projected to increase rapidly. By 2026, interest will become the third largest category of the budget, behind only Social Security and Medicare. And by 2048, interest is projected to be tied with Social Security as the largest category.
4. Rising debt will harm our economy and slow the growth of productivity and wages. To stabilize the debt, changes should be enacted as soon as possible; on our current path, waiting just five years raises the cost of stabilizing the debt by 21 percent.
The good news is that it’s not too late to adjust course, and the sooner we get started, the easier it will be to fix. To learn more about bipartisan policy options, visit our Solutions page.
Photo by Alex Wong/Getty Images
Further Reading
Long-Term Budget Outlook Leaves No Room for Costly Legislation
As lawmakers consider costly legislation to extend expiring tax provisions this year, CBO’s latest projections serve as a warning that our fiscal outlook is already dangerously unsustainable.
Moody’s Warns Recent Policy Decisions Worsen U.S. Fiscal State, Maintains Negative Outlook Rating
Moody’s says that the United States is in fiscal deterioration, warning that government policy decisions in the near term could contribute to higher interest rates and worsening national debt.
National Debt Would Skyrocket Under TCJA Extension
New analysis released from the nonpartisan CBO shows deficits doubling and debt skyrocketing under a scenario where the expiring provisions of the Tax Cuts and Jobs Act were made permanent.