A bleak fiscal future

rdquinn

Jul 2

Long-Term Projections Paint a Bleak Fiscal Picture

June 28, 2023

The Congressional Budget Office (CBO) released its Long-Term Budget Outlook today, which shows debt rising to 181 percent of GDP by 2053 under CBO's current baseline. Although the long-term outlook has modestly improved due to the enactment of the Fiscal Responsibility Act, it remains unsustainable.

You can read more about the Long-Term Budget Outlook in our summary of the report. We will provide further analysis later today.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

Today's long-term projections show that we have made some recent progress, but there is still a tremendous amount of work needed to put our fiscal situation on sound footing.

Even under the latest projections, debt will eclipse its record level in just six years and reach nearly double the size of the economy in 30 years. This level of debt would be truly unprecedented, and it is largely due to the rapid growth of Social Security, Medicare, and interest on the debt while revenue fails to keep pace.

Though the Fiscal Responsibility Act was an important step forward, it can only be the start of our efforts to get the debt under control. The FRA didn't address health care, Social Security, or tax revenue. There is no way to put our debt on a sustainable course without looking at these three parts of the budget.

Policymakers need to stop demagoguing Social Security and Medicare and start leveling with the American people about the serious challenges these programs face. In just the next ten years, three major federal trust funds – for highways, Social Security, and Medicare – will face insolvency. If allowed to occur for Social Security, that will mean a 26 percent across-the-board benefit cut for all seniors, regardless of how much they depend on the program. This do-nothing plan is unacceptable.

Politicians also need to stop taking pledges that make solutions harder, including pledges that impede efforts to cut costly tax breaks, lower health care costs, raise new revenue, or save Social Security from insolvency.

Policymakers should build on the bipartisan success of the Fiscal Responsibility Act with more deficit reduction and a bipartisan fiscal commission to take a holistic approach to fixing our budget. Time is of the essence; we simply cannot afford to keep borrowing at this unsustainable rate.