This photograph has nothing to do with the Congressional Budget Office report, but it’s one of the most popular photos on the Internet. WELL, WE HAD TO GET YOUR ATTENTION SOMEHOW!!
Yesterday the Congressional Budget Office released a new report on the expected economic outlook on both the US budget and the overall economy for the next ten years (2016-2026).
Hold up, wait! While this isn’t as exciting as say Donald Trump flubbing a Bible verse, it’s 100 times more important than anything on the campaign trail right now. The CBO is a non-partisan government office in which its reports do matter in understanding the overall health of the economy. So what was in yesterday’s report? Here are the quick points.
- The biggest news from yesterday’s CBO report is that it estimates the federal deficit will rise to $544 billion due to this year’s budget shortfall, making it $105 billion more than last year’s deficit. It would be the first time the deficit has increased since 2009, making the size of the deficit 2.9% of the Gross National Product (GNP).
- Alright, alright, so what did all that mean? Basically due to the $680 billion spending and tax package that Congress passed last year, it added to the overall federal deficit. Which if we’re being honest here, didn’t surprise anyone. The new budget bill included more spending for government programs – specifically the steady growth of mandatory government programs like Social Security and Medicaid – which if you combine that with the new tax breaks introduced, can create a sizable deficit which will be added to the overall sizable US debt.
- It’s important to note that 11% of that increase to the deficit comes actually from the US healthcare system. Specifically when talking about Affordable Care Act subsidies (aka Obamacare) and its expansion of Medicare along with Medicaid. In other words, if Republicans wanted to create an attack ad against “Obamacare”, the CBO just handed them some ammunition.
- Yet the bigger news here is in regards to the now altered economic forecast. Back in August, the CBO released a report that predicted lower deficit predictions for the next 10 years. Now however with considerations of the most recent budget, the agency had to lower its projections by a half trillion dollars! While the CBO is stating that due to the increase in the national deficit, the overall health of the economy looks to be not as optimistic with its most recent forecast.
- With that said, it’s not all doom-and-gloom for the next ten years. Even with an increase in the deficit, the CBO predicts the overall economy will be healthy, in that it will “expand solidly.” Also it’s important to note that a 2.9% deficit size is nothing compared to the 9.8% deficit that occurred during the 2008 recession. In cases like these, it’s important to remember that the economic outlook that CBO is presenting is worse than it was originally predicted back in August, but not terrible by any stretch of the imagination.
- Still while Republicans will blame Democrats (and vice-versa), both parties had a critical role in the massive increase to the US deficit this year. In coming to a compromise over the budget, neither the Democrats (who wanted more money for government programs) nor the Republicans (who wanted an increase in tax cuts) wanted to give up anything in their talks. If the government is spending more AND taking in less money, it’s only natural deficits will rise. We should all keep that in mind when both parties are lobbing claims at each other as we march towards the November elections.
(Photo Credits: National Geographic’s Instagram, Google Images)