Federal Deficit to Soar After Ryan-Obama Deal
(Washington Times) – The federal budget deficit will soar this year, the Congressional Budget Office reported Tuesday, after President Obama and Congress gave up on austerity late last year, embracing spending hikes and massive new tax cuts that have left the government awash in red ink.
Adding to the problems is a projected rise in interest rates, which will force the government to pay higher costs as it services the trillions of dollars of debt that have already piled up over the last 15 years.
CBO analysts say the deficit will reach $544 billion in fiscal 2016, which is a 24 percent leap over last year’s total. It’s also deeper than what the analysts had projected in August, when they had assured Congress deficits would continue to fall slightly.
The difference is the year-end deal House Speaker Paul D. Ryan and Mr. Obama reached to boost spending and approve a series of special tax breaks.
“That increase is largely attributable to legislation enacted since August — in particular, the retroactive extension of a number of provisions that reduce corporate and individual income taxes,” the CBO said.
The return of deficits is unwelcome news for Washington, which has shown little appetite for the kinds of tax hikes or spending cuts needed to get the situation under control.
Overall, spending will spike by 6 percent in fiscal 2016, to reach $3.9 trillion, which is 21.2 percent of the country’s output as measured by gross domestic product. By contrast the government will collect just $3.4 trillion in taxes, or 18.3 percent of GDP.
And those trends will continue for the next decade, the CBO report. Taxes will hold steady at about 18 percent of GDP, while spending will rise from 21 percent to 23 percent — producing ever-worse budget news for the next president to handle.
The CBO, which is the government’s official scorekeeper, released a summary of its latest budget projections Tuesday. A full evaluation is slated for next week, just ahead of Mr. Obama’s annual budget submission to Congress.
http://www.washingtontimes.com/news/2016/jan/19/federal-deficit-soar-2016-after-ryan-obama-tax-dea/
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