June 27, 2018 CBO releases Long-Term Budget Outlook The Congressional Budget Office on June 26, 2018, released the 2018 Long-Term Budget Outlook, affirming its previous report that federal debt held by the public will approach 100% of GDP by 2028, and projecting it will then soar to more than 150% of GDP by 2048. CBO said debt as a percentage of GDP is a good barometer for the federal budget's sustainability, and has ballooned over the past decade, especially due to deficits arising from the 2007–2009 recession and the resulting policy responses. The report said large budget deficits over the long term are projected because spending would grow steadily under current law, and revenues would not keep pace. The main culprits of spending growth continue to be interest on the government's debt, Social Security, and the major health care programs, primarily Medicare, with most of the spending growth for Social Security and Medicare resulting from the aging population. CBO said the Tax Cuts and Jobs Act (TCJA) has significant direct effects on CBO's budget projections. "Before incorporating macroeconomic feedback, CBO estimated that the tax act would increase the primary deficit (that is, the deficit excluding the costs of servicing the debt) by a cumulative $1.843 trillion from 2018 to 2028 as a result of higher deficits through 2026," the report said. After 2028, CBO estimates, the permanent provisions of the TCJA would reduce the primary deficit, on net, over the next 20 years. "In particular, the change in the inflation indexing of tax parameters and elimination of the penalty for not having health insurance (which causes fewer people to enroll in health insurance programs subsidized by the federal government) would reduce the deficit by more than the revenues lost through lower corporate taxes," CBO said. The report comes amid concerns over long-term entitlement spending and charges from Democrats that the cost of the TCJA makes Republicans more likely to seek cuts to entitlement and other programs sooner. The FY 2019 budget resolution approved by the House Budget Committee June 21 calls for $8.1 trillion in deficit reduction over 10 years, including $5.4 trillion in mandatory program cuts over 10 years, $302 billion of which would be processed through budget reconciliation. The resolution faces an uncertain future, with even full House consideration of the FY 2019 resolution not yet agreed to. The CBO 2018 Long-Term Budget Outlook is attached. ———————————————
——————————————— Long-Term Budget Outlook
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