CBO: U.S. Revenue Gains Push Down Deficit, Delay Default

The $426 billion deficit this year is about $60 billion less than last year, and is far down from the trillion-dollar numbers notched at the beginning of the Obama administration, when he and Congress agreed to a massive package of tax cuts and deficit spending to try to bolster the economy.

The United States is on target to hit its $18.1 trillion debt limit by either mid-November or early December, according to a Congressional Budget Office report released Tuesday.

In March, the price range workplace projected a $486 billion deficit for the present fiscal yr, which ends September 30.

However the annual summertime replace by the nonpartisan Congressional Price range Workplace additionally contained phrases of warning.

The 2014 price range deficit was $485 billion.

The budget office report lowered its projection for 2015 economic growth to a modest 2.3 percent, down from its 2.8 percent forecast in January and reflecting a weak first quarter performance by the economy.

According to the revised CBO baseline projections, the deficit will dip to $414 billion next year as the economy continues to improve but then will begin to rise substantially, to $1 trillion by 2025 absent any major change in existing tax and spending legislation. “This is an unsustainable path here for federal debt”.

“If the debt limit is not increased, the Treasury will not be authorized to issue additional debt that increases the amount outstanding…That restriction would ultimately lead to delays of payments for government activities, a default on the government’s debt obligations, or both”, the CBO reported.

Republicans said the report underscored the need to curb spending.

“Without control over spending, our nation will lose control over its own future”, said House Budget Committee Chairman Tom Price, R-Ga. It projected that growth will return to around 3 percent annually in 2016 and 2017 before dipping again.

Congress has been operating under a two-year budget deal that temporarily lifted stringent caps on domestic and defense spending, but that is due to expire at the end of this fiscal year. On average over the last 50 years, annual deficits have been 2.7 percent of the economy’s size.