"Daunting." "Unsustainable." These are the sort of adjectives the Congressional Budget Office—about as calm and reserved an office as exists in Washington—uses when it reports on the country's fiscal future. Given the agency's penchant for cautious understatement, you might translate the gist of its big-deal budget reports something like this: "Budget-wise, we're probably screwed."
But at least we'll have lengthy CBO reports to burn for warmth (and roast marshmallows over!) after the budgepocalypse. Today, the CBO released yet another detail-packed mega-report on the country's budgetary outlook, covering the period from 2010-2020. And as the cowboys say in cartoon Westerns, it ain't purdy. "Under current law," the report reads, "the federal fiscal outlook beyond this year is daunting."
Key findings include:
- Projected average yearly deficits of about $600 billion for each of the next 10 years. That's around $6 trillion total, $1.35 trillion of which we'll see just this year.
- Significantly higher debt, fueled by those high deficits. By the end of 2020, public debt is expected to equal 67 percent of GDP—up from 53 percent in 2009.
- As a result, the report says, "interest payments on the debt are poised to skyrocket." According to CBO projections, annual spending on interest payments will triple.
Complicating the picture is that CBO's projections, as a rule, have to assume that current law will stay in effect, and unchanged, for the duration of the projection period. That means that, for example, the projections include revenue generated from tax cuts that supposedly expire but are widely expected to be renewed. The report also assumes that appropriations spending will rise in line with inflation rather than with GDP. The result, as the report states explicitly, is that "baseline projections understate the budget deficits that would arise under many observers' understanding of current policy." Or, to put it another way, if everything goes the way everyone expects everything to go, things will actually be even worse than we're predicting.
Combine this with the office's summer 2009 report on the long term budget outlook, in which CBO director Douglas Elmendorf called the country's long-term budgetary path "unsustainable," and you get a fairly unsettling picture of a country hurtling towards, if not actual disaster, then some serious fiscal pain. As the summer report noted, the options for righting the course are limited: raise taxes or cut spending, and soon. I know which one I think is more likely, given the current state of affairs, but neither's exactly an easy sell. And knowing how willing politicians typically are to do either, I'd say that's a daunting outlook, indeed.