Ten Things the Latest CBO Report Tells Us About Federal Finances
Earlier this week the Congressional Budget Office (CBO) released its updated outlook for the federal budget. Here are ten lessons it teaches us about the troubled state of federal finances.
1.Federal debt is projected to grow faster than the economy can sustain. During President Obama’s time in office the nation has engaged in a protracted experiment in fiscal stimulus, manifested in five years of record federal budget deficits. As a consequence federal debt has risen dramatically relative to our economic output. In President Bush’s last full year in office, federal debt was 40.5% of GDP. This year it’s 76.3%. Economists are deeply divided over the wisdom of current deficit-spending. Some argue that the mounting debt and slow economic recovery demonstrate the policy’s imprudence, while others argue that the government should be doing still more deficit-spending. Regardless, it is incontrovertible that the economy remained weak as federal debt soared. CBO’s latest projections indicate that under current law not only will we fail to bring federal debt back to historical norms, but that it will ultimately rise faster than the economy can sustain.
Federal DEBT Accumalation is Unsustainable