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The Budget Is at a Crossroads. Which Path Will Congress Take?

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Unread 08.22.19, 03:53 AM
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The Budget Is at a Crossroads. Which Path Will Congress Take?

On 08.21.19 12:54 PM posted by Justin Bogie

Thanks to the latest massive budget deal passed by Congress, our nation’s fiscal situation isdeteriorating even more quickly than before.

That’s the main takeaway from the Congressional BudgetOffice’s updated economic projectionsfor fiscal years 2019-2029, released on Wednesday.

The latest estimates reiterate that the federal governmentcontinues to live beyond its means. The longer lawmakers delay action to curbwasteful spending and reform unsustainable entitlement programs, the larger theburden will be for younger and future generations.

In May, the Congressional Budget Office projected the deficit would be$896 billion this year and showed it crossing the trillion-dollar threshold in2022.

The outlook has worsened significantly in just three months.The Congressional Budget Office now projects that by the end of September, thedeficit will be $960 billion and exceed $1 trillion next year.

The nation’s debt trajectory is equally alarming. Debt held by the public was 77.8% of gross domestic product in 2018. By Sept. 30, it will be an estimated 79%, and by 2029 debt held by the public is projected to reach 95.1% of GDP—an increase of 3.3 percentage points since May.

In total, the Congressional Budget Office projects publicdebt will rise by $11.8 trillion over the next decade.

The problem is not a lack of money. The problem is growingspending. The Treasury took in record revenue in fiscal year 2018, and revenueprojections for the coming decade dropped only slightly from May.

Much of the blame for the worsening projections owes to thepassage of the Bipartisan Budget Act of 2019. Signed into law in July, the billwas the fourth in a series of two-year agreements to raise the discretionaryspending caps set by the BudgetControl Act of 2011.

The Bipartisan Budget Act increased base discretionary spending by $322 billion over two years and effectively killed one of the last semblances of fiscal restraint intended to slow Washington’s appetite for spending.

The Congressional Budget Office’s updated baseline projections are built off these higher spending levels, meaning it now assumes more discretionary spending each of the next 10 years. The Congressional Budget Office estimates that deficit impact of the budget deal will be $1.7 trillion through 2029.

Discretionary spending gets most of lawmakers’ attention, butit makes up only about one-third of total federal spending.

The rest of the federal budget consists of autopilotprograms, such as Social Security, Medicare, Medicaid, and interest payments onthe federal debt.

The Congressional Budget Office estimates that by 2029,entitlements and interest payments on the national debt will consume 86% of allfederal revenues. Social Security, Medicare, and Medicaid are driving three-fourthsof total spending growth over the next decade.

The federal government will spend more on interest paymentson the debt than Medicaid by 2023 and will nearly eclipse defense spending by2029.

And these interest payment estimates assume that due tolower rates, payments will now be $1.1 trillion less than the May projections.If rates rise, interest costs will consume even more of the budget.

For many people, debt and deficits are just big numbers thatdon’t seem to impact their day-to-day lives. But that is not the case.

Without significant reforms to major programs, most Americansover the next 30 years will take home less money as federal debt rises.

The Congressional Budget Office recently sent a letterto Rep. Steve Womack, R-Ark., the ranking member of the House Committee on theBudget, explaining that if current policy is maintained, gross national productper person will be $3,400 lower by 2049.

This is particularly demoralizing for younger and future generations who may never have the same opportunities and economic freedom as their parents and grandparents.

The good news is that Congress and the president have thepower to alter this course.

In its letter to Womack, the Congressional Budget Officeestimated that if lawmakers implemented reforms to lower the national debt to pre-recessionlevels, gross national product per person would be $5,500 higher than undercurrent projections.

The picture is clear. The current fiscal situation isunsustainable and the longer reforms are delayed, the harsher the impact willbe for current and future generations.

But there is hope. If lawmakers implement spendingrestraints now, we could each achieve greater economic security.

America’s future is at a crossroads. It’s up to lawmakers todo the hard work of saving our fiscal future.

The post The Budget Is at a Crossroads. Which Path Will Congress Take? appeared first on The Daily Signal.

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