The Congressional Budget Office (CBO) released its Budget and Economic Outlook today – 5-25-22. CBO projects high rates of inflation will bring the national debt to a low of 96 percent of Gross Domestic Product (GDP) in 2023 before rising to a record 110 percent of GDP by 2032. CBO projects the deficit will total $1 trillion in 2022 and nearly $16 trillion over the subsequent decade under current law, while CPI inflation will be 4.7 percent in 2022 and 2.7 percent in 2023.
Unpaid-for extensions of expiring legislation, spending increases, or tax cuts would make the fiscal outlook even worse. The Committee for a Responsible Federal Budget will publish our preliminary analysis here and provide further analysis later in the day.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
CBO’s latest projections show some expected good news: after two years of deficits averaging a record $3 trillion and debt nearly as large as the economy, both deficits and debt as a share of GDP will decline this year. But this is no time to break out the champagne glasses – deficits will remain extremely high and debt is on course to reach a new record as a share of the economy by 2031.
The combination of expiring COVID relief and massive inflation, along with the economic recovery, have helped provide a fiscal reprieve. But trillion-dollar deficits are here to stay, and $2 trillion deficits will arrive by 2031. Meanwhile, debt is slated to reach a record 110 percent of GDP within a decade and could rise even further if lawmakers extend various expiring policies.
Today’s report also highlights disturbing fundamentals – the rising costs of Social Security, health care, and interest on the debt will continue to eclipse revenue growth, and the debt will keep rising.
Rather than declare victory and abandon deficit-reduction efforts, policymakers should work together to truly bring our deficit and debt under control. It’s time to put words into action and enact a fiscal plan that pays for new initiatives, lowers health care costs, raises revenue, secures our major trust funds, cuts wasteful spending, stomps out inflation, and promotes strong economic growth. Rather than celebrating the false victory of returning from fiscally-disastrous to fiscally-bad, we should work to achieve a position of actual fiscal health.