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Government Borrowing Continues, CBO Says Outlook Dire
August 19, 2014
The U.S. Treasury Department has announced it expects to borrow $192 billion in the third quarter of this year. This is an increase of $170 billion from the borrowing amount announced in April. Additionally, the Department estimated it will need to borrow $187 billion in the fourth quarter of 2014 to keep the Government running and to meet financial obligations such as servicing the existing $17.6 trillion federal debt. The federal budget deficit was $680 billion in FY 2013. This marked the first time the annual deficit did not exceed $1 trillion during Barack Obama’s presidency, which reached a record $1.4 trillion in 2009.
The nonpartisan Congressional Budget Office (CBO) announced federal debt is now 74% of the economy and will rise to 106% of gross domestic product by 2039 if current trends continue, CBO stated in a newly released long-term budget outlook. Contributing to the explosion in expenses is spending on Social Security, Medicare and Medicaid, which will be 14% of GDP by 2039. That’s twice the 7% average seen over the past 40 years. In its last long-term budget outlook in September 2013, CBO said debt held by the public was 73% of GDP and projected debt would be 102% of GDP in 2039. Meaning our nation’s finances continue to grow outside of expectations.
“To put the federal budget on a sustainable path for the long term, lawmakers would have to make significant changes to tax and spending policies: reducing spending for large benefit programs below the projected levels, letting revenues rise more than they would under current law, or adopting some combination of those approaches,” said the CBO in their report.
This is a tall order indeed. Our nation has not seen a balanced federal budget in nearly two decades and the government continues to operate under a “continuing resolution.” This legislation is not passed on a regular interval, but extends previous operating budget levels for different periods of time. The current continuing resolution is set to expire at the end of the 2014 fiscal year – September 30, 2014. Lawmakers are likely to extend the status quo and avoid a fiscal fight with the crucial mid-term elections just a little over a month later. This gives voters an opportunity to send a clear message to Congress and the White House – a balanced budget is in the best interest of our nation and its citizens.
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