CBO and the Long-Term Budget Outlook

The Congressional Budget Office (CBO) is an agency within the legislative branch of the US government. It is a non-partisan government agency that provides economic data to Congress.

The CBO recently submitted its long-term US budget outlook. It is a grim picture. The CBO shows that things are suddenly getting out of control. No wonder many Americans are becoming increasingly concerned about all the spending coming out of Washington.


According to the CBO report The current recession has little effect on long-term projections ... CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of these deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010.

If outlays grew as projected and revenues did not rise at a corresponding rate, annual deficits would climb and federal debt would grow significantly. Over time, the accumulation of debt would seriously harm the economy.

The report goes on to say, Under current laws and policies, rapidly rising health care costs and an aging population will sharply increase federal spending for Medicare, Medicaid and Social Security.

Unless increases in revenues kept pace with escalating spending, or spending growth was sharply reduced, soaring federal debt would weigh heavily on economic output and incomes.