The short-term U.S. fiscal situation is improving and will result in a $60 billion smaller deficit in 2015, the lowest of President Obama's tenure, but that won't last for long thanks to unsustainable debt, the Congressional Budget Office said in a new report released Tuesday.
Even with an anticipated increase in tax collections, the CBO said that the government will most likely continue spending outside of its means, causing the deficit to more than double in 10 years and push public debt up to 77 percent of gross domestic product.
In the meantime, an unexpected flood of revenue is expected to shrink the deficit to $426 billion for fiscal year 2015, down from a previous estimate of $486 made in March. The 2016 estimate was also revised, now forecast to hit $414 billion, $41 billion less than previously estimated.
By 2018, however, the economy will have fully rebounded from the 2007 Great Recession and debt will begin to rise as government spending grows and the economy cools again, reported The Washington Times.
"The growth in debt is not sustainable," CBO Director Keith Hall said. "At some point, it's going to get to a very high level. Obviously, you can't predict tipping points, but at some point this becomes a problem."
Federal spending will continue outpacing revenues over the next decade, causing the deficit to more than double to $1 trillion by 2025, CBO predicted.
"Such deficits would push debt held by the public up to 77 percent by the end of the 10-year projection period, roughly twice the average it has been over the past five decades," the report says. "Beyond 2025, if current laws remained in place, the same pressures that contribute to rising deficits during the baseline period would accelerate and push debt up sharply relative to GDP. Such high and rising debt would have serious negative consequences for the nation."
Federal revenues - including individual income taxes, corporate income taxes and payroll taxes - are expected to climb to $3.3 trillion, or 18.2 percent of GDP, by the end of 2015, CBO said. By 2025, revenues will likely hit near $5 trillion, a 52 percent increase, and government spending will increase at an even higher rate, according to The Washington Examiner.
Federal outlays will rise to some $6 trillion by 2025, a 62 percent increase. In 2015 alone, outlays will increase by $199 billion over last year, mostly due to Social Security, Medicare, Medicaid, Children's Health Insurance Program and Obamacare subsidies.
Social Security, the largest federal program, currently pays out $66 billion per month and is projected to represent 5.7 percent of GDP by 2025. Medicare and Medicaid, the federal programs for the elderly and poor, are projected to reach a combined 6.2 percent of GDP.
Some Democrats suggested the short-term predictions signal that it's time to halt tax breaks in order to bring in more revenue to be spent on infrastructure, education and other investments, according to the Times.
Republican Senate Budget Committee Chairman Mike Enzi of Wyoming warned against increasing spending.
"I would caution those who would use this report as an opportunity to take these short-term savings and push for more spending," Enzi said in a statement, reported Reuters. "If our nation is serious about balancing our budget and reducing America's debt, real, substantive budget reforms and savings will have to be on the table during any spending negotiations."
Judd Gregg, a former senator and a co-chairman of the budget advocacy group Fix the Debt, recommended that both sides look beyond the numbers and develop solutions to get rid of the nation's debt.
"I don't know how anyone can declare victory when trillion-dollar deficits are just on the horizon," Gregg told the Times. "While deficits are down this year, the real story is that they are on the rise and that our national debt is at record-high levels and growing."
