According to the Congressional Budget Office, the federal budget deficit will shrink to its lowest level since President Obama took office.
Recent economic growth is a contributing factor in the deficit decrease from last year’s $483 billion to $468 billion, the number it will shrink to by September when the budget year ends.
“In CBO's estimation, increases in consumer spending, business investment and residential investment will drive the economic expansion this year and over the next few years,” the CBO’s report, released Monday, read. The report also showed a 14 percent drop in the number of people without health insurance, largely due to President Obama’s healthcare policy."
According to an Associated Press report, the good news came with a warning. After 2018, the CBO report said, the deficit will begin to rise again as baby boomers start to retire and utilize benefits like Social Security. By 2025, the deficit could potentially top $1 trillion, and Social Security would make up a quarter of the federal budget.
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“Such large and growing federal debt would have serious negative consequences, including increasing federal spending for interest payments, restraining economic growth in the long term,” the CBO said, “giving policy makers less flexibility to respond to unexpected challenges and eventually heightening the risk of a fiscal crisis.”
“The underlying point is that we have a handful of very large federal programs that provide benefits to older Americans,” CBO director Douglas Elmendorf said. “And with the rising number of older Americans and a rising cost of health care, those programs get much more expensive."
The White House said Monday that despite the deficit decrease and economic improvements, Congress has work to do going forward to ensure continued growth.
“CBO's longer-term budget and economic projections confirm the need for Congress to act to strengthen our economy for the middle class while putting our debt and deficits on a sustainable trajectory, including by making the investments that will accelerate economic growth and generate good new jobs for our workers to fill,” Deputy Press Secretary Eric Schultz said in a statement.
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The CBO report also projected that the unemployment rate would fall to 5.3 percent by 2017.