'Unexpectedly,' federal deficit larger than expected: CBO
Smaller than anticipated tax revenues from individuals and businesses have led to a sharp increase in the predicted deficit for 2016, according to the Congressional Budget Office.
Meanwhile, spending continues to rise, leading to an anticipated budget deficit of $590 billion.
The federal government has sunk deeper into the red than analysts projected just five months ago, and is now poised to post a $590 billion shortfall this fiscal year, the Congressional Budget Office said Friday.
That’s some $56 billion worse than the CBO had projected in March, and it comes as new spending far outpaces revenues.
Both individual and corporate income tax revenue is down so far this year — though the reasons are not fully clear yet, analysts said. What is clear, though, is that government spending continues to rise, and when adjusted for the timing of payments is up about 3 percent compared to 2015.
“The government’s revenues and spending so far this fiscal year lead CBO to expect that the annual deficit will total $590 billion — rather than the $534 billion that the agency projected in March, when it released its most recent set of budget projections,” the CBO said in its monthly budget review. “In large part, that increase stems from lower-than-expected revenues.”
The analysts promised a more complete projection later in August.
The fiscal year began Oct. 1, and with 10 months in the books, the numbers are beginning to firm up.
Analysts said tax revenue so far is $2.7 trillion, while spending is $3.2 trillion, for a deficit of $514 billion so far. That’s compared to just $466 billion through 10 months last year.
We are now ahead of schedule for a return to trillion-dollar deficits, with that mark being reached by 2022 or earlier. With spending caps removed and tax cuts continuing, the percentage of the deficit to GDP is expected to rise from 2.5% in 2015 to 4.4% in 2022.
Publicly held debt is projected to increase $8.5 trillion over the next 10 years.
To say we're in big trouble is to state the obvious – not only because the numbers are so scary, but because we have a Congress and a president unable and unwilling to do what is necessary to save us. Ideas are not lacking. What we lack is the will to act, and I don't see either candidate in this race possessing the political courage to do what has to be done to get the deficit – and our national debt – under control.