Deficit Forecasts Shaved, But Likely Won't Shrink For Much Longer
The nonpartisan Congressional Budget Office said Monday that it expects the federal deficit will be about $22 billion less this fiscal year than previously thought, and about $9 billion less than had been anticipated next year.
"But if current laws do not change," CBO warned, "the period of shrinking deficits will soon come to an end. Between 2015 and 2024, annual budget shortfalls are projected to rise substantially — from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024 — mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt."
Still, CBO also said that while deficits are going to start rising again unless lawmakers act, the increases in those annual shortfalls between revenue and spending will likely be less than it had been predicting as recently as February. It gives the Affordable Care Act (or Obamacare as it is known) some of the credit:
"The projected cumulative deficit from 2015 through 2024 is $286 billion less than it was in February: Though projected revenues are slightly below the amounts that were previously reported, projected outlays have dropped by more, largely because of lower subsidies for health insurance under the Affordable Care Act (ACA). CBO also projects slightly lower outlays for Medicare, the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps), defense, and net interest."
Also Monday, CBO said it had not changed its economic projections. It still expects gross domestic product will grow 3.1 percent from the end of 2013 through 2014, and 3.4 percent next year. The unemployment rate may remain relatively high, however. The jobless rate, which stood at 6.7 percent in March, will dip only to 6.3 percent by the end of 2015 if CBO's forecast is correct.