The Congressional Budget Office’s “Update to the Budget and Economic Outlook: 2014 to 2024” reports a federal deficit of $506 billion for fiscal year 2014 (which ends on September 30), slightly above its April projection of $492 billion. Spending in 2014 will be about $3.5 trillion, growing by about 2 percent compared to the previous year. The debt will rise slightly as a percentage of GDP to 74 percent, staying at a level not seen since World War II.
Over the next decade, government spending is projected to grow annually on average by 5.2 percent. Eighty-five percent of this projected growth in spending will be due to three main budget components: Social Security (the largest federal program), health care (spending on which will overtake Social Security spending by 2015), and interest on the debt.
The government is growing over 5 percent a year while the economy grows just 2 or 3 percent. Should the economy enter a recession and shrink, government growth will increase. This situation is brought to you by the same people who like to lecture about “sustainability.”
But I’m sure saving a few billion dollars delaying the refueling (or scrapping) of an aircraft carrier will fix the problem — no?
We’re eating our seed corn while we sit and wonder why the future no longer looks so bright.