The CBO Budget and Economic Outlook in the Post ‐​COVID Fiscal Era

Romina Boccia and Dominik LettThe Congressional Budget Office (CBO) just released its latestBudget and Economic Outlook for 2023 to 2033, providing 10 ‐​year fiscal projections for the post‐​COVID fiscal era. The United States is on the tail‐​end of an unprecedented surge in emergency spending during which inflation hit a 40‐​year record high. To control this surge in inflation, the Federal Reserve adopted a tighter monetary stan ce by increasing interest rates. In this context, CBO’s report forecasts a worsening fiscal trajectory characterized by high and rising federal debt. Pandemic spending followed by a surge in interest costs have accelerated pre‐​existing trends. As Cato’s Jeff Mironexplains,“COVID-19 has not changed the fact that [fiscal imbalance] remains large and unsustainable because pre‐​pandemic entitlement programs and other expensive policies—notably Medicare, Medicaid, Social Security, and the Affordable Care Act—had already put U.S. fiscal policy on that path.”Legislators and the administration should adopt a  concrete plan to stabilize U.S. debt as a  percentage of GDP by reducing the growth in spending. Following are key takeaways from CBO’s report that should motivate lawmakers to take corrective action this year.Debt will grow to an unprecedented 118 percent of GDPFederal publicly held debt (the debt the United States has borrowed from credit markets) iscurrently $24.6 trillion. By 2024, public debt is projecte...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs