The Concord Coalition Says Latest 10-Year Projection from Congressional Budget Office Shows Federal Budget Moving Faster Down Unsustainable Fiscal Path
WASHINGTON, February 15, 2023 /PRNewswire/ — Today, the bipartisan Congressional Budget Office (CBO) released its latest projections for the federal budget and the US economy, a renewed reminder of unsustainable federal budget trajectories. According to The Concord Coalition, CBO’s new projections show that the expressed desire of many political leaders to reduce the fiscal deficit, or even balance the budget, is fundamentally at odds with their equally expressed desire to exempt popular programs from spending cuts or disregard higher revenues to pull .
“The post-COVID dividend has expired. After a steep fall in deficits following the expiry of emergency measures to provide COVID relief, the budget has resumed a pre-existing pattern of escalating deficits that reflects a long-standing mismatch between promised spending and projected revenues,” called Bob Bixby, Executive Director of the Concord Coalition. “To pretend that this pattern can be changed without touching popular programs like Medicare, Social Security and Defense, which account for 48 percent of the budget, or without generating more revenue is a conscious decision to ignore the obvious. Difficult choices must be made to put the budget on the path to fiscal sustainability.”
After nearly two decades of record-low interest rates, persistent inflation has led to rising interest rates that will translate into higher interest costs when the Treasury rolls over the securities needed to refinance the government’s debt. CBO’s latest projections show net interest payments will cost $11.1 trillion in the next ten years, compared to $8.1 trillion in last year’s report. By 2028, net interest costs will exceed all defense spending in CBO’s projections.
It’s also important to note that CBO’s most recent projections include some of the Biden administration’s student loan forgiveness initiatives, except for the potentially most costly element: a proposed regulation on a new earnings-related repayment plan.
Finally, both Medicare Part A (2033) and Social Security (2033) CBO projects will default within the next decade. Under current law, depletion of trust funds will force programs to operate on a pay-as-you-go basis, delaying and effectively reducing payments to beneficiaries and providers by 15% and 22%, respectively. While it is standard practice to assume that payments will be made in full and on time despite trust fund insolvency, this assumption is misleading. Policymakers and the public should understand that doing nothing to combat bankruptcy will automatically result in benefit cuts.
The Concord Coalition is a nonpartisan grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has been working to educate the public about the causes and consequences of the national deficit and debt and to develop realistic solutions for sustainable budgets. For more financial news and analysis, visit concordcoalition.org and follow us on Facebook @ConcordCoalition and on Twitter: @ConcordC
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SOURCE The Concord Coalition