New CBO Budget Projections

The Congressional Budget Office released its projections over the next decade for the federal budget deficit and the overall outlook of the economy in general. The data and summary can all be found at cbo.gov. Remember that sustained budget deficits lead to larger and larger national debt.

Budget outlook for 2009-19:

The dramatic expansion of the deficit in 2009 (up from 3.2 percent of GDP in 2008) results from a projected rise in outlays of 24 percent (the largest percentage increase since 1952) and a drop in revenues of 17 percent from last year’s levels (the largest percentage drop since 1932). Those changes have largely been the result of the severe economic downturn and the fiscal impact of federal policies enacted in response.

On the long term outlook:

Over the long term (beyond the 10-year baseline projection period), the budget remains on an unsustainable path. Unless changes are made to current policies, the nation will face a growing demand for budgetary resources caused by rising health care costs and the aging of the population. Continued large deficits and the resulting increases in federal debt over time would reduce long-term economic growth by lowering national saving and investment relative to what would otherwise occur, causing productivity and wage growth to gradually slow.

I recommend again for everyone to watch I.O.U.S.A. which can be found here in Part I and Part II. Also check out this "Fiscal Wake-up Tour" slide presentation.