The Congressional Budget Office (CBO) issued a new budget forecast last week. It should be a wake-up call to policymakers, and to the candidates running for president. It is also a clear indictment of fiscal policy during the Obama presidency.
The forecast shows annual federal budget deficits rising throughout the coming decade, pushing total federal debt to levels well above the historical norm. CBO projects the federal budget deficit will be $544 billion in 2016, or 2.9 percent of GDP. By 2026, the annual deficit will be nearly $1.4 trillion, or 4.9 percent of GDP. Over the period 2016 to 2025, CBO expects the federal government will need to borrow an additional $9.4 trillion, pushing total federal debt up to $23.8 trillion, or 86 percent of GDP.
The deficits projected in CBO’s forecast, and the level of debt they would cause, are almost unprecedented in the nation’s history.