New CBO Data Confirms America's Fiscal Problem Is Excessive Spending

Dan Mitchell

June 21

Earlier this week, the Congressional Budget Office issued a new 10-year fiscal forecast showing spending, revenues, and red ink between 2025 and 2034.

As these examples show, almost all of the resulting headlines focused on deficits and debt.

The New York Times reported that "U.S. Debt on Pace to Top $56 Trillion Over Next 10 Years"
The Associated Press reported that "Congressional Budget Office raises this year's federal budget deficit projection by $400 billion"
Reuters reported that "CBO projects FY 2024 US deficit to jump to $1.9 trln amid higher outlays"
The Washington Post reported that "National debt will exceed $50 trillion by 2034, budget watchdog estimates"

These titles are all accurate. But they also miss the point.

It would like writing a headline on June 7, 1944 entitled "Thousands die on French beaches" without mentioning the D-Day invasion to liberate Europe.

The accurate takeaway from the CBO report is that the United States faces a serious problem of out-of-control federal spending.

How do I know that? Because I went to the spreadsheet that accompanied the CBO report and looked at lines 84-91 of Table 3-1. Lo and behold, the increase in red ink is entirely the result of more spending.

Fortunately, one media outlet focused on the real takeaway from the CBO report.

Here are some excerpts from a Wall Street Journal editorial.

Spending is the real problem, and it's getting worse. ...Notably, CBO's revenue projections are little changed. Revenue is expected to total 17.2% of GDP this year—roughly the 50-year average before the pandemic... But CBO significantly revised up projections for federal spending. Outlays are now expected to hit 24.2% of GDP this year and average 24% over the next decade. Wow. ...Entitlement spending—which now includes student loans—is growing at a pace that is fiscally unsustainable. Financing these programs has also become more expensive... CBO's budget forecasts are getting progressively uglier, but it's not because Americans aren't paying their fair share in taxes.

Amen.

Our problem in Washington is too much spending. And that problem would exist even if $2 trillion floated down from Heaven and this year's deficit disappeared.

P.S. I can't resist sharing two additional sentences from the WSJ editorial.

Neither Mr. Biden nor Donald Trump talks about the national debt, perhaps because they might then have to do something about it. ...Failing to take on that challenge means either a monumental tax increase or a debt panic down the road.

Sadly, this is correct. Both Trump and Biden want to condemn America to giant tax increases on lower-income and middle-class households (keep in mind that there are not nearly enough rich people to finance European-sized government).