5 Good CBO Options to Reduce the Federal Deficit

This report comes at a welcome time as Congress is negotiating a year-end spending package in which it mightincrease deficits steeply. Instead of making the fiscal situation even worse, Congress should hit the deficit brakes and reduce spending.Based onCBO ’s budget and economic outlook (last issued in May 2022), federal deficits will average 5.1 percent of gross domestic product (GDP) per year between 2023 and 2032. Or roughly $1.6 trillion each year over the next 10 years. Under that scenario, federal debt held by the public would reach 110 percent of GDP by 2032 —the highest level ever, exceeding the debt following World War II.Projecting out even further, publicly held debt would reach 185 percent of GDP at the end ofCBO ’s long-run 30‐year projection period. And this rosy scenario assumes Congress allows middle-class tax cuts for individuals and families to expire as scheduled in 2025, which is unlikely. Under more realistic assumptions, where Congress extends those tax cuts and revenues return to their 50 ‐year average, publicly held debt would exceed 260 percent of GDP by 2052. And even this shocking outlook may prove to be rosy as it does not take into account the potential for unexpected crises, such as a prolonged recession, war, or another pandemic.CBO presents 76 options to reduce deficits in its latest report. I selected five that deserve more congressional attention because they would reduce spending growth in some of the largest federal programs that ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs