WASHINGTON—Providing political ammunition to both parties, Congress’ official budget analyst projected Tuesday that this year’s federal deficit will drop to $426 billion, the lowest shortfall of Barack Obama’s presidency.
But the annual summertime update by the nonpartisan Congressional Budget Office also contained words of warning. It cautioned that without action by lawmakers, a graying population and growing health care costs will push annual federal deficits upward again later this decade, spiking back above $1 trillion in 2025.
That would push the government’s total debt, accumulated over decades, to $27 trillion by 2025, or 77 percent of the country’s projected economic output that year. Economists say such amounts could drive up interest rates, boost government debt costs and hinder lawmakers from using tax and spending changes to ease the impact of future recessions.
“The growth in debt is not sustainable,” budget office chief Keith Hall told reporters. “You can’t predict tipping points, but at some point this becomes a problem.”
The budget office released its figures two weeks before lawmakers return from a summer break steering toward a budget clash. The Republican-led Congress has approved a blueprint that uses spending curbs on Medicare, Medicaid and other programs to claim a balanced budget in a decade, a plan Democrats have derided as harsh and unrealistic.
“I would caution those who would use this report as an opportunity to take these short-term savings and push for more spending,” said Senate Budget Committee Chairman Mike Enzi, R-Wyo. He said “real, substantive budget reforms and savings will have to be on the table during any spending negotiations.”
