Washington’s financial prospects are depressing. The authoritative Congressional Budget Office anticipates that coming years will continue to see federal spending outstrip revenues by a wide margin.
Here in broad strokes is what the CBO reveals about Washington’s finances. Its economists project that federal revenues from all sources will grow about in tandem with the economy, taking on average a touch over 18% of GDP each year, close to historical precedent. The spending side of the ledger is less stable. The CBO projects that federal outlays will grow from some 23.8% of the economy this year to some 25.8% by the mid-2030s, and then climb farther to some 28.9% by mid-century, a 5.
It is the growth of entitlements – Social Security, Medicare, Medicaid, and lesser programs of this sort – that lie at the root of the relative rise in spending and the budget problems generally. These lines of spending will rise according to the CBO from an estimated 10.8% of GDP this year to 13.7% in the mid 2030s and to 14.9% by mid-century. That 4.1 percentage point increase in the relative size of entitlement’s spending amounts to more than four-fifths the relative rise in all spending.
The CBO’s forecast differs little from past precedent. Federal spending for decades has grown as a portion of the economy almost entirely due to the relative rise in entitlements spending. Between 1970 and this year, overall federal spending has risen from 18.7% of the country’s GDP to the CBO’s 2022 estimate of 23.8%. This increase has occurred even as relative levels of defense spending have fallen from 7.8% of GDP in 1970 to some 3.5% today.
Though the CBO has basically extrapolated historic trends into the future, the picture it paints may be too optimistic. It assumes, for instance, that defense spending will hold about steady at about 3.5% of GDP. It might look conservative to remove from the outlook the past budgetary relief offered by relative declines in such spending, except that developing geopolitical pressures seem likely to raise the relative size of defense outlays.
Shocking Mr Obvious
Stop giving out money you don’t have
huh? how can happen? we elected an incompetent leader, he gave us free stuff.
It's not unexpected of Biden. And the next move is gonna be 'tax the rich'.
Biden is just a politician.... His pocket is what matters... Dude being around for 50 years
And what is this of the deficit being being reduced by almost 2 trillion this year
Wilson
Time to put the tax rate for those making over a million back to where it was under Eisenhower.