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Subscribe to RSSUPDATED 4:09 p.m. ET -- The Congressional Budget Office projected Tuesday that the national debt will continue to grow over the next ten years even as the economy recovers, the unemployment rate falls, and tax revenues increase.
The report said, "At an estimated $845 billion, the 2013 imbalance would be the first deficit in five years below $1 trillion" and would be only half as large as the deficit was in 2009, relative to the size of the economy. But that improvement will be merely temporary: in the next several years, an aging population will drive entitlement spending higher at the very same time that rising interest rates increase the government’s debt-service costs, the CBO warned.
Recommended: Obama calls for at least short-term fix with cuts, revenue to avoid sequester
In its annual Budget and Economic Outlook, the CBO said debt held by the public will be bigger by 2023 than in any year since 1951 and will be at 77 percent of gross domestic product (GDP) by 2023, far above the 40-year average of 39 percent of GDP.
As a result, the CBO report said, the federal government’s interest costs “will be very high” and will be rising. Interest costs will more than double by the end of the ten-year forecasting period and will be at their highest share of GDP in the past five decades.
CBO director Douglas Elmendorf emphasized to reporters Tuesday that in the past several years, the federal government has benefited from “an extraordinarily long period of extraordinarily low interest rates.”
Elmendorf also stressed that the pressures on the federal budget continue to be driven by the cost of the entitlement programs for older Americans.
Even though the rate of increase in health care spending – including Medicare spending -- has slowed in the past few years, “we still see substantial growth in federal health care spending” over the next ten years and beyond, Elmendorf said.
He noted that in the next ten years the number of people eligible for Social Security retirement benefits will jump by 40 percent. Most of those people will be eligible for Medicare benefits as well.
“We are confronting now in our country changes of a sort we have not had to make in the past,” he said. If one looks at the 20 years before the 2007-2008 financial crisis, he said, “we had rising spending on Social Security and on the major health care programs that was offset as a share of GDP (gross domestic product) by a decline in defense spending.”
But “that’s not a strategy that can be repeated at that magnitude over the next 40 years, because defense spending has come way down as a share of GDP and because the demographic pressures” that are driving up Medicare, Medicaid and Social Security outlays “are so intense,” Elmendorf said.
“We have a large budget imbalance, we have large projected deficits, a debt that will remain at a historically high share of GDP and will be rising at the end of the coming decade. What that implies is that small changes in budget policy will not be sufficient to put the budget on a sustainable path,” he warned.
The CBO chief said a $4 trillion reduction in cumulative deficits over ten years would result in a balanced budget by the end of the ten-year period but to get that deficit reduction entirely from spending would require a two-thirds cut in all non-defense discretionary spending.
“The gap between spending and revenues is very large, and that means that changes you would need to eliminate that gap will be large relative to either outlays or taxes. It would even require large changes even if one split the impact between spending and taxes,” Elmendorf noted.
The CBO’s ten-year forecast assumes that the automatic spending cuts, or sequester, required by Congress and President Obama in the 2011 Budget Control Act, will remain in place.
But if Obama and Congress cancel the sequester’s spending cuts, the CBO said about $1.2 trillion more would be added to cumulative budget deficits over the next ten years.
The Budget Control Act’s spending cuts, which are scheduled to begin on March 1, will reduce defense outlays by about 8 percent and non-defense discretionary outlays by about 5 percent in the current fiscal year, the CBO report said.
On Tuesday Obama called on Congress to pass "a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months" while it comes up with a longer-term alternative.
If the Budget Control Act’s spending cuts are left in place, projected federal spending in the CBO’s forecast will average 22.1 percent of Gross Domestic Product over the period from 2014 to 2023, which is CBO's ten-year forecasting window.
That figure is less than the spending level in 2012, but it is high by the standards of the past 30 years, during which federal spending has averaged 21 percent of GDP.
The CBO estimates that tax revenues will increase by about $260 billion, or 11 percent, in the current fiscal year. About half of that increase in revenues is due to the Social Security payroll tax reverting to its normal 6.2 percent rate at the start of this year, after being cut to 4.2 percent as an economic stimulus measure in 2011 and 2012.
Elmendorf said the economy is growing stronger. “The good news is that the effects of the housing and financial crisis appear to be gradually waning,” he told reporters, predicting “a virtuous cycle of faster growth in employment, income, consumer spending and business over the next few years.”
But the tax increases enacted at the end of last year and spending curbs in the Budget Control Act will depress economic growth this year.
The CBO said the economy will grow at a real, inflation-adjusted rate of 1.4 percent this year and 3.4 percent next year, with the unemployment rate remaining high through 2014.
If the CBO forecast is correct, 2014 will be the sixth consecutive year with unemployment exceeding 7.5 percent, “the longest such period in the past 70 years.”
But the CBO forecast assumes that the jobless rate will fall to 5.5 percent by 2018. It was last at that level in the summer of 2008.
Each January, the CBO issues its budget projections for the next 10 years. The forecast is intended to guide Congress as it designs fiscal policy. The CBO projections assume that current law remains in place and that no new tax increases, spending cuts or fundamental restructuring of federal programs such as Medicare are enacted.
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Even as the American Economy Recovers we have to solve the problem of Rising Debt Or Else the Future Generation of Americans may have to pay the price for it. GOD Bless the Americans. GOD BLESS THE USA.
Kevin Valentine Moraes
Mira Road (Thane)
Go ahead and point the finger, American people, regarding who is responsible for all this economic mess we are in. There are always three fingers pointing right back at you, called "me, myself, and I". As imperfect as our system of democracy is, it is still you all who are responsible for electing these corrupt and incompetent politicians to national office, so in the end you can blame no one but yourselves for all this terrible economic mess we are in. Have fun, everyone! - RC
Here IS the bottom line..............Like it or not, there is no single option to fix this problem. It IS going to take a combination of spending cuts and revenue increases.............the spending cuts should be about 3 or 4 to 1 per the tax increases. Like it or not, this IS the solution, no one wants to admit it, but IT IS. Unfortunately, Obama WILL NOT agree to such large cuts - look at his history - he has not even executed a single cut to which he agreed the last time congress raised the debt ceiling. This administration neither has the guts to make hard decisions, nor has it the ethical backbone to compromise its demagoguery for the good of the citizenry..............The republicans are not much better. TERM LIMITS NOW!
I have a small suggestion both parties hate:
Let the sequester become law it trims another 120 billion or so out of this years and future budgets. The political BS on both sides leads you to believe these are random and arbitrary cuts. NOT SO. These cuts will be made by the the folks managing the budgets rather than congress. The pentagon will do a better job of trimming the military budget than congress ever could. It will lead to a very stagnant economy and perhaps recession and perhaps increased unemployment. but we have to take our medicine sometime and as this article explains now is much better than latter I am a lifelong democrat and voted both times for Pres Obama, but we have to solve the debt problem or it will end America
Forget ideology, with the economic lies and the just released drone memo, how can any American continue to support this president?
Breaking news - the FCC wants to spend billions to provide free wifi. This means they can control your access. Watch your back.
Most people are poor most of the time....it will now be enhanced in our new America; the follower instead of the leader. All part of an agenda the public is not privy to...except as pawns in the game. Government is not under your control so stand by to watch whatever happens.
The Tea Party was formed for the sole reason to curb Government spending.....
Thank you MSNBC for printing an article quoting the CBO validating everything that the TEA PARTY embodies.
The Left could not remember why the Tea Party came about...they just hated them because the Tea Party stance of Government Spending cut into their "Dead Beat " Voting Block
Thanks to the CBO(The Left can not argue with the CBO) the article pretty much tells you the Tea Party had it right all along despite the Left Media Machine painting them as Extremist.
The tea Party was corrupted by the republican party about 10 minutes after it was formed and is now just a part of the corporate greed machine. Why hasn't the Tea Party ever stood up to the fraud and greed of Wall Street. Because Wall Street owns you. Teabagger lemmings.
The Facts are what they are.....The CBO is telling you that you are wrong.....Not sure how you associate Wall Street with the Tea Party...all you can do is spew hatred and NAME CALL...According to the CBO ...you are wrong with your positions ...and the TEA Party s right. You know ..you remind me of somebody that just got his ass kicked in a fight and he is still calling the other guy stupid names.
markinbecker seems to forget that Wall Street, corrupt or otherwise, is the total source of the income that these idiotic Progressives as so fond of taxing! Without Wall Street and the revenues taken from their income, what would you disingenuous Progressives use to buy your votes?
In any case I'm able to chose to deal with these firms or not to deal with them as i see fit! I'm given NO such choice with Governmential Agencies! Most of whom are even more corrupt than those on Wall Street!
Well the CBO report clearly shows we need more tax revenue, mainly by eliminating credits, deductions, and the carried interest and long term capital gains scams that benefit only the rich. We also need to cut some creditors and deductions on the middle class. We also need to cut defense spending over time, not by the upcoming sequester. We need to reform ss, medicare and medicaid. We can clearly cut some discretionary spending. This is all easily done. The middle ground on all of these issues will accomplish what we need. Thank You George Bush for putting us in this mess. You ruined our economy and exploded our debt.
George Bush...had a Democratic House and Senate. I guess according to you that it is always the Congress fault. Thank you Mr Clinton for the Housing Bubble crash!
Any idiot knows there is not enough tax dollars in this Country to satisfy the debt.... Yep like I said in the above post..
The amount of additional tax revenue that can be gained from "eliminating credits, deductions, and the carried interest and long term capital gains scams" are minuscule compared to the size of the federal budget deficit. Aside from big tax increases on the middle class, there is only one way left to get our federal debt problem under control and that is through spending cuts. It is simple math.
That goes against the Class Warfare Markinbeker believes in.....Well because his Party told him that was the case.....
Markin, what are you talking about?
First off, your gal, Mary Landrieu, said discretionary spending isn't out of control. You should ping her and let her know she is allowed to cut some.
Secondly, you are still on the Bush wagon. Wow... we all agree the wars were unnecessary. But then again, if liberals wouldn't get all up-in-arms when we carpet bomb, we could have laid waste to Afghanistan in a couple of weeks with no lose of American lives and at 1% the cost.
But Obama said he would cut the deficit in half. Not even reduce the debt, just cut the deficit. And he couldn't do it. Did you read the article??? Have you seen the CBO projections?
We need 500B surpluses for 20 years to cut the debt in half. Read this again slowly... 500B in SURPLUS budgets for 20 years to cut the debt IN HALF.
How can you get 500B in surplus if you have 1T in deficit spending every year? Will you tax the people 1.5T in additional taxes? You just raised taxes on the top 1%, and 2% on the middle class, added estate taxes and medical device taxes and all kind of new taxes. That won't even get you 80B a year. How will you raise 1.5T a year?
You make 50K a year and are 350K in debt. Do you continue to lease the Mercedes and rent the beach house and get the 1000 channel cable TV subscription and get a night job at McDonalds that won't even cover your outrageous spending? Or do you cut all of the nonsense spending?
So, you've given up. You want to blame Bush and spend like you have 2 weeks to live and say "Screw it!".
Typical liberal. No solutions... so just compound the problem.
What is truly mind-boggling, is just how many ignorant and uniformed people to this day still blame the republicans and bush for the current mess. I guess that in itself makes you understand just how Obama won a second term. Because we all know, it has absolutely nothing to do with his track record and what he accomplished his first term (zero). The guy takes credit but never the blame, and his sheep follow his word as if it were law.
The storm clouds however, are gathering, and it is just a matter of time before it hits. Dow at 13,000+ and unemployment up with a slight GDP contraction are a few of the warning signs.
Do their web browsers ever point them to news sites other than this one?
At least NBC did the right thing and post this story. It's extremely rare for you see both aisles of politics, at least where this site is concerned.
This has become a Turkey Shoot for the Right. The Left sits there and does not have an answer. They thought the Media was on their side. To even see a response by Markinbecker ...Marriott and the rest ...truly exposes their ignorance to the present financial problems this Country truly has. They think it is contest between Republican and Democrat...They really do not grasp the seriousness of these problems.
Agreed completely Mike.
How the media doesn't hold this administration accountable, while consistently informing the American public of the dire situation we face, is an absolute travesty and injustice to everyone.
The media keeps pumping out "feel good" stories knowing that most won't go the extra step to uncover the truth, due either to ignorance or lack of interest. I don't know if the justifications used is because he is black (and that isn't playing the race card), because he is good with the camera, or because his biggest contributors also own the media and have a vested interest in slanting to make him appear god-like. In any case, he is leading us down a road that this country has NEVER been on.
However, as NBC proved by posting this, the truth wiill be more difficult to hide as the days tick by.
Very difficult to take seriously any article that starts off with three false premises in the first sentence!
Improving economy? With Obama manipulating it at one end with borrowed money and Barnanke manipulating it at the other through QE- ???, with fiat currency, WHAT improvement
Falling Unemployment rate? When it goes from 7.8 to 7.9%, exactly how is that considered FALLING? It becomes even worse when we consider that 8.3 Million people have been forced entirely OUT of the work force these past four years!
Tax Revenues increasing? The history of tax increases has always been, 100% of the time, small short term gains , followed quickly by large, usually about 40%, decreases in revenues. how can they, with a straight face, claim increasing revenues?
Okay here is the real story. And although the ending can be nice, it will piss you off. And it should if you have a pulse.
There is enough wealth (money, gold, whatever) on this planet to take care of this issue. And I am not just talking the United State’s financial problems. I am talking about the debt of all countries. But that is neither the solution nor the end to all problems. It is much more than that.
What if I told you that technology exists to power your home and your car FOR FREE. What if I told you that this has actually been around for decades? What affect would that have on your life, your situation, your children, your parents? If you never had to pay for the power, power that not only is free but no longer requires polluting rivers, blowing up mountain tops, or burning, or splitting an atom – all of which are destructive to the environment?
You would be asking where this technology is, and why is this not being made available to the public?
“I am sorry, Mr.Tesla. We cannot use your device, because we cannot put a meter on it.”
Hhmmmmmmm.
Are you starting to get upset?
It is in the best interest of those who have a lot of wealth and power – to keep that wealth and power (obviously) – because absolute power corrupts absolutely. People in this state will do absolutely anything to keep this power. Anything.
Where did all of this wealth come from? Decades ago it began to accumulate due to oil, gas, and coal. And if money from those technologies starts to fill up your pockets - you do not want anything to change, to disrupt that paradigm. If your status of life has been elevated to this level why would you want to change it? You become intoxicated now with the amount of power and control that you have. What do you care now about the status or quality of life of the others who “have not?”
Look around you now – cars running on gas, power lines clogging the horizon – THIS HAS BEEN AROUND FOR A CENTURY.
George Jetson dropping off his wife to the mall in his flying car – we all thought 50 years ago we would see that in a decade.
Folks, we split the atom and went to the Moon – IN THE LAST CENTURY.
Along comes an inventor who creates an energy saving device or a machine in his garage – where the amount of electricity or power produced by the device exceeds the power required to run the device. Well he is excited, and makes the mistake of telling all of his friends about it. The next day he gets a visit from a few men in suits that are not in a happy mood and the machine gets confiscated for “security reasons”
The number of patents and inventions that are frozen for this reason number in the thousands.
AND WHY? Because it threatens the paradigm. The Elite will not have this.
Despite what Wikipedia says, or CNN, MSN – energy can be obtained from the fabric of space that surrounds us for free. FOR FREE. UNLIMITED. NOTHING GETS DESTROYED OR HARMED IN ANY WAY. Tesla knew that back in the 1800s.
Do you understand what this means? It means an end to cancer. It means an end to poverty. It means an end to pollution. It means an end to control by the few because it empowers everybody.
It ultimately it will lead to the end of money – because it will no longer be needed. There will be no “have-nots” because everyone will “have”
Do I have your attention now?
I acknowledge that the CBO director has spoken the truth. But what WE ARE experiencing right now is part of a change that has been fuelled by technological advancement. As our aging population grows, technology takes part in off-setting the retiring workers. Robotics has already done so much in terms of saving production cost in the manufacturing sector.
Soon this phenomenon will spread through the financial sector, as well as services sector. I've been observing the jobless recovery since after the post 9/11 economic crisis of 2001, and realized that entrepreneurial activities have been geared towards innovation of modern technology. But these improvements are quite expensive, even the government sector will have to upgrade even further, and the cost will be shared heavily by the tax payers now and in the future.
Had the economy gone back to the Clinton tax rates at the year's start, perhaps the economic forecast may not be quite as dim as it is now. But our incumbent leadership wanted to impress its voters, that everything is a O K, and that their leaders are in control.
The massive technological advancement of the past 83 years has been attributed to efficient tax collection by the government--that I believe is what I call control, there was I believe the rule of law and the respect for the law. Can't say the same to the incumbent and to the present predicament of this Great Nation of ours to date.
Perhaps we'll just have to wait for the next leader to come 3 years hence, and perhaps we all can un-do the useless presidential mandates that have caused the government to incur massive and useless spending (suffices that not all mandates were bad).
The economy will never recover because every time it looks as if Americans may have a little more disposable income the price of gas goes up. And this will never be resolved because we have a bunch of greedy, lying, pieces of crap running our country. Oil companies are still receiving incentives for things they aren't doing and they have a monopoly but the government doesn't want to mess with that because all of these crooks are lining their pockets with oil money. Just explain to me how we can have numerous refineries making gasoline in our country and how all of a sudden and all at once production has been reduced therefore driving up the price of gasoline? And how can the tension in the Middle East have anything to do with the price of our gasoline when these crooks in the US are exporting more gasoline than we use here? They create their own highs and lows and the government will do nothing because that is their big meal ticket for campaign funds and pocket change. Sure oil companies can show they aren't making a huge profit because all of the bribe money goes to politicians before the profits are shown. It is no difference with foreign trade. Government still supports tax incentives for companies moving out of the US and they will never address immigration reform because that would involve supporting one side and not the other and that would cost these idiots votes. People of the United States are stupid to think these people in office care for anything but power, money and getting re-elected. And in the last election we voted for the least effective administration to do anything but sensationalize items like gun control and immigration to draw attention away from the fact that they are totally lacking in fixing anything to do with our economy.
Four billion dollars a year in tax breaks for PROVEN research and development does not compare to the BILLIONS of dollars of direct taxpayer funded guaranteed loans and grants given to FAILING "green" industries that just happen to be run by Democrat bundlers, supporters, and even White House staff members. The tax breaks given to oil companies over TWENTY YEARS (80 billion), doesn't add up to what Obama has handed out in tax breaks to "green" industries in just ONE (90 Billion).
As for "tax incentives" for companies moving out of the US, exactly WHY are those companies moving out in the first place, did you EVER think of that? It just couldn't be the highest corporate tax in the world, expensive and stifling regulations, and unions bankrupting them, could it? And it's NOT a "tax incentive" either, it's merely a tax deduction for the moving of equipment and people. And again, there is not ONE DIME of taxpayer money given to a company that is FORCED to set up in another nation because they can't afford to stay in business here.
"Immigration reform" to the left means NOTHING more than amnesty for millions upon millions of Federal lawbreakers. They don't give a dam about border security, they don't give a dam what it's going to cost the states and Federal government in "social" entitlements that the CITIZENS of this nation that need help should get but instead will be forced to PAY FOR, they don't give a dam about these millions of illegals STEALING jobs from citizens at a lower wage. All they care about is getting millions more almost illiterate, low skilled, non-English speaking lawbreakers on the voting rolls and almost literally ENSLAVED to their "social" entitlements that keep them in poverty for generations, as long as they vote Democrat of course.
Thanks to eight years of bush and his wars,med part d,bush tax cuts we are now in a deficit
We had deficits before him, and 6+ trillion and counting since W. Only 1 prez responsible for our almost 17Trillion in debt? LOL
Bullet--you dumba ss libbers keep referring to bush wars. He has been gone for 4 years are we still fighting in the middle east???????? Get your head out of your backside. I am so sick of you blind a ss followers continue with the bush's fault thing. Your libtard idiot POS is in control now and for a time he had full control of everything he needed to pull out the troops. And as you plainly saw during the tax debates the tax cuts favored the middle class as much as anyone and your beloved dipstick prez is going to raise taxes on everyone anyway because him and his liberal idiots in congress can't quit spending. Quit being a dumb ass follower and start realizing no one person, party or administration owns a war. All of the pukes in DC just continue so they can line their pockets. Gosh you people make me sick with your foolish blame and doing nothing to fix the problem and letting this idiot prez get away with his BS. Be independent and think for a change.
Cheryl,
Do you like spreading lies,what did bush do to stem immigration?
Clinton left us n a surplus,,,well I guess the GOP won't be buying or lying their way into the white house in 2016 either
Hillary 2016
There was no surplus. There are 2 components to our debt. Public....bonds and such. And intra-governmental debt..what we owe ourselves. There was a bit of surplus in the public portion, but the other part was negative and more than the public portion which left us with a net ....DEFICIT.
The economy was recovering when Bush senior left office but the liber, lying rags never reported it like that until after the election. Then in January they starting showing the glowing reports even before Slick Willy took office. You have to quit reading these lying liberal rags and their slant and actually go to the internet and look up the unbiased reporting or the actual events and then make up your mind. I kept newspaper clippings from that time frame when clinton was elected so I am not looking back at a slant these idiots want to put on the story I am reading the actual story and seeing the actual economic events that were occurring.