Profile image
By Freedomworks (Reporter)
Contributor profile | More stories
Story Views

Last Hour:
Last 24 Hours:

CBO Report Increases Urgency for Entitlement Reform

Tuesday, October 25, 2016 16:23
% of readers think this story is Fact. Add your two cents.

The Congressional Budget Office (CBO) released a report last month projecting an increase in the federal budget deficit relative to the gross domestic product (GDP) for the first time since 2009. The deficit for this year is now expected to be $590 billion. As a percentage of GDP, that is 3.2% compared to last year’s 2.5%. It is not good news when the deficit is growing faster than the economy, which is currently growing at 1.4%.

The most significant source of increase in the deficit this year is the six percent increase in government spending on programs like Social Security and Medicare. Unlike discretionary spending, these entitlement programs are on autopilot, increasing annually without the need for Congress to vote. The only increase that was higher is the 11 percent increase in interest payments on the national debt the government makes. The baby boomer generation is aging, meaning every year more outlays are required to satisfy these entitlement programs, whether in the form of Social Security payments or Medicare spending. By December 9th, Congress is expected to vote on a budget for fiscal year 2017. Yet, as in past years, Congress continues to avoid politically difficult decisions on entitlement reform, making the problem more urgent and costly for future generations.


According to the CBO, the deficit is expected to balloon to $1.2 trillion by 2026. As a percentage of GDP, it would be 4.6%. Furthermore, over the next ten years, GDP is expected to grow at a slower pace than previously projected. By 2026, the deficit will be larger relative to GDP than the average of the last 50 years. Another disturbing measure is the federal debt held by the public relative to GDP. By the end of 2016, it is expected to be 77% of GDP, or approximately $14 trillion. By 2026, it is expected to be 86% of GDP, or $23 trillion. That is a level that has not been seen in 50 years. This can become a serious problem if interest rates go up and the federal government is forced to make higher interest payments on the debt over the next ten years.

In order for these dire projections to be reversed, the economy has to grow faster. There has to be an increase in consumer and investment spending. One way to get these two forms of spending going is to restore confidence in the country’s fiscal situation. As long as consumers and investors continue to believe their government is headed in an unsustainable path, it will be very hard to restore confidence in the economy. This is one more reason for Congress to act now, rather than continue to kick the can down the road.


We encourage you to Share our Reports, Analyses, Breaking News and Videos. Simply Click your Favorite Social Media Button and Share.

Report abuse


Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories



Top Global

Top Alternative



Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.