WASHINGTON, DC: Just how far have budget deficits drifted off the radar screen of presidential politics? Here’s one indicator: Last week, the nonpartisan Congressional Budget Office (CBO) issued its annual “Budget and Economic Outlook” report — a detailed examination of White House and congressional policies — and hardly anyone paid heed. The inattention is striking because the report was full of sobering news.
— Cumulative deficits over 10 years (2016 to 2025) are now projected at $8.5 trillion, up from a $7 trillion estimate in August. Federal debt held by the public — the total of all past deficits — is projected at $22.4 trillion in 2025; in 2016, it’s $13.9 trillion. By 2025, the debt would equal 84 percent of the economy (gross domestic product) compared with 74 percent in 2015. Many economists think the rising debt unsustainable.
— Almost half the spending growth over the decade comes from two programs — Social Security and Medicare. Much of the rest stems from other health programs (Medicaid, the Affordable Care Act) and from interest on the debt. The projected annual interest payments rise from $223 billion (1.3 percent of GDP) in 2015 to $772 billion (2.9 percent of GDP) in 2025. Meanwhile, other programs, from defense to the courts, are squeezed.
— The CBO believes the US economy will grow more slowly. Since World War II, the US economy has generally averaged 3 percent annual growth or better. Now, the CBO thinks realistic growth is around 2 percent. Part of the decline reflects retiring baby boomers leaving the workforce. The rest is something of a mystery. Regardless, slower economic growth squeezes tax revenues. It’s harder to service the debt.
It’s no secret why deficits are shunned. Take-away politics — raising taxes, cutting popular subsidies and handouts — is unfriendly. People deplore deficits, but they don’t deplore the programs and tax breaks that create the deficits. Plus, the budget numbers are mind-boggling. In 2016, the federal government will spend $3.9 trillion. Social Security is $910 billion. Numerous small programs cost a few billion. Ordinary people have a hard time getting a handle on these stupendous sums.
So the candidates evade. They pile expensive proposals atop existing deficits, as if they didn’t exist. Sen. Bernie Sanders wants to nationalize health care and make public college free. Hillary Clinton wants more spending for child care, clean energy and infrastructure. Donald Trump’s tax plan would cut government revenues by $9.5 trillion over its first decade, says the nonpartisan Tax Policy Center. Claims that these proposals would be “paid for” by either new taxes or spending cuts should be treated skeptically.
(c) 2015, THE WASHINGTON POST WRITERS GROUP