The Congressional Budget Office recently released its 10-year budget projection and economic outlook for the U.S. and guess what: We still need to work on the whole spending versus revenue thing.
The CBO is projecting a deficit of $1.1 trillion for fiscal year 2012 (which ends Sept. 30), down 2 percentage points as a percentage of GDP from last year's $1.3 trillion deficit. While that sounds like some good news, CBO Director Douglas Elmendorf notes that the deficit is still the highest of any deficit between 1947 and 2008.
It's important to know that while the deficit projections do make some assumptions about the economy and job growth, they are mostly projections based on current policies in place, especially the ones that affect taxing and spending.
The first important point to consider if we are at all in agreement on lowering the deficit: Current policies, including sunsetting of Bush and Obama tax cuts and mandatory spending cuts agreed to last year, would lower the deficit to roughly an annual level of about $200 billion, or just 1.5 percent of GDP from 2013 to 2022. The policies in place now would lower the deficit by about half, to $585 billion in 2013. . . .
In other words, if Congress does nothing (something it's getting good at), the deficit would be cut in half within a year or so.
Overall federal spending is projected to declined as a share of GDP in the next few years but will rise after that. . . .
The Free Press, Mankato, Minn.
Published Feb. 18, 2012, in Allied News, Grove City. Pick up a copy at 201 A Erie St.