The Oklahoman: Federal Deficit To Be Lowest Since 2007, Budget Office Says
The Oklahoman - Chris Casteel
The annual budget deficit will be the lowest since 2007, but the federal government's spending and accumulated debt are still heading to dangerous levels, the Congressional Budget Office reported Tuesday.
With about five weeks remaining in the federal fiscal year, the CBO is estimating a deficit of $426 billion. That would be $59 billion below the 2014 shortfall.
Keith Hall, director of the nonpartisan CBO, said the deficit will also fall for the sixth straight year as a share of the overall economy — the gross domestic product.
Budget reductions made in recent years to the military and most other federal departments have driven down discretionary spending to the lowest level in decades as a share of GDP.
But spending on Social Security and health care entitlements — Medicare, Medicaid and Obamacare subsidies — continues to rise and will drive the total debt to unprecedented levels as a share of GDP, Hall said.
The budget pressures will be exacerbated when interest rates return to historical norms and the government has to pay more to borrow money, he said.
"Such high and rising debt would have serious and negative consequences for the nation," Hall told reporters.
Sen. James Lankford, R-Oklahoma City, said many fights with the White House over the last few years have resulted in dramatically lower deficits, but there is still “a long way to go."
"This year's deficit is still one of the largest deficits under any other president, long-term entitlement obligations remain sky high and the country's gross domestic product still fails to meet even modest growth expectations," Lankford said.
"We cannot cut enough to balance our budget. We must put policies into place that allow our economy to grow, while restraining spending. We need presidential leadership and a Congress that will confront the reality of long term debt consequences.”
Rep. Tom Cole, R-Moore, a member of the House Budget Committee, said the lower deficit "does show Congress has been serious about trying to cut spending."
Republicans have passed budgets to take entitlement spending, he said, but can't get President Barack Obama to engage in serious talks.
If the next president isn't willing to tackle mandatory spending, he or she will leave entitlement programs facing bankruptcy, he said.
Cole, who has been urging entitlement reforms for years, has authored bipartisan legislation to establish a special commission on changes to Social Security. That is the approach used in the early 1980s to rescue the system, he said, and the changes could again be gradual.
The deficit in 2007 was $161 billion, but it shot up to $458 billion in 2008. In the first four years of the Obama administration, deficits topped $1 trillion.
The CBO is projecting lower deficits for the next two years, and then rising shortfalls that will again top $1 trillion in a single year in 2025.
The nation's total debt has nearly doubled as a share of the economy since 2007 and now stands at 74 percent of GDP, Hall said.
The CBO is predicting the total debt will rise to 77 percent of GDP by 2025, almost twice the average of the past 50 years.
The CBO is projecting the economy will grow by 2 percent this year and by about 3 percent in the next two years.
Online: The Oklahoman