In February, the Congressional Budget Office (CBO) released their annual Budget and Economic Outlook that projects deficits will be higher than historical levels, largely due to growth in mandatory spending programs like Social Security and Medicare. In addition, both revenue & spending are projected to be elevated above historical levels. In a recent analysis, the Tax Foundation presented their major takeaways from the CBO’s report.
“Increased outlays are primarily to blame for higher deficits going forward, particularly the growth in mandatory spending programs, including Social Security and Medicare, and rising interest on the debt. From 2024 to 2034, mandatory spending will grow from 13.6 percent of GDP to 15.2 percent of GDP, while discretionary spending will decline from 6.2 percent of GDP to just 5.1 percent of GDP.”
“The remaining increase in outlays is due to a historic increase in interest payments, which go from 3.1 percent of GDP in 2024 (exceeding the defense budget for the first time in records going back to 1940) to a new record high of 3.2 percent in 2025, before rising higher to 3.9 percent in 2034.”
Click here to read the full report at the Tax Foundation.
Click here to read the CBO’s The Budget and Economic Outlook: 2024 to 2034.
