Deficits and Projections

CBPP’s Updated Projections Show Long-Term Budget Outlook Is Significantly Improved but Remains Challenging

No deficit or debt crisis looms, and the weak labor market remains the nation’s most immediate economic concern.  But policymakers and the public should not ignore the long-run budget problems, which remain challenging.  Policymakers should address the need both for immediate measures to strengthen the job market and for measures to reduce longer-term deficits, which should take effect when the economy has more fully recovered.

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Projected Ten-Year Deficits Have Shrunk by Nearly $5 Trillion Since 2010, Mostly Due to Legislative Changes
Recent Spending Cuts Outweigh Tax Increases 3 to 1

Since 2010, projected ten-year deficits over the 2015-2024 decade have shrunk by almost $5.0 trillion, $4.1 trillion of which is due to four pieces of legislation enacted in the intervening years.

Some 77 percent of the savings from those pieces of legislation — which include the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012 — come from program cuts, 23 percent from revenue increases. Projected deficits have also fallen because of a dramatic slowdown in health spending.

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What Is Driving the Large Projected Deficits?

"Federal deficits and debt have risen sharply under President Obama, but the evidence continues to show that the Great Recession, President Bush’s tax cuts, and the wars in Afghanistan and Iraq explain most of the deficits that have occurred on Obama’s watch…."

 

Background

Over the past several years, deficit and debt projections have improved significantly, thanks in large part to enacted deficit-reduction legislation and slower healthcare cost growth. The Center’s May 2014 report on long-term projections shows that there is no longer a looming deficit or debt crisis, but rather the nation’s most pressing economic concern is the weak labor market. Still, policymakers should not ignore our long-run budget problems, which remain challenging. Ideally, policymakers will enact both immediate measures to strengthen the job market and measures to reduce longer-term deficits, which should take effect once the economy has more fully recovered.

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