CBO Issues Updated Budget Projections for FY13 to FY23
CBO estimates that if the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642B, the smallest shortfall since 2008. Relative to the size of the economy, the deficit should reach at 4.0% of GDP which will be less than half as large as the shortfall in 2009, which was 10.1% of GDP.
Because revenues, under current law, are projected to rise more rapidly than spending in the next two years, deficits in CBOs baseline projections continue to shrink, falling to 2.1% of GDP by 2015.
However, budget shortfalls are projected to increase later in the coming decade, reaching 3.5% of GDP in 2023, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.
CBOs estimate of the deficit for this year is about $200B below the estimate that it produced in February 2013, mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac.
For the 2014-2023 period, CBO now projects a cumulative deficit that is $618B less than it projected in February. That reduction results mostly from lower projections of spending for Social Security, Medicare, Medicaid, and interest on the public debt.