The US budget deficit goes down, down, down — at least for now
AEIdeas
Much good news and (a little) bad news on the US budget, via Dow Jones:
The Congressional Budget Office raised its forecast for the 2015 budget deficit Monday by $18 billion to $486 billion. The increase was due to changes in estimates for costs of federal programs including Medicare, Medicaid and student loans. … The CBO lowered its 10-year projection for the deficit by $431 billion due to factors including lower costs for the Affordable Care Act, higher tax revenues and lower interest costs on the national debt. Cumulative deficits over the next 10 years are projected to total $7.2 trillion. Long-term estimates are lower, yes, but still historically high relative to gross domestic product, notes the non-partisan CBO. By 2025, it says the federal debt could total 77% of GDP, more than any year prior to 1950.
The massive drop in the US budget deficit is still one of the great, lightly reported economic stories, from 10% of GDP at the start of the Great Recession to less than 3%. But enjoy it while it lasts. The entitlement tidal wave fast approaches.
Now of that $431 billion long-term deduction, $142 billion came from a revised spending forecast for Obamacare. First, with health premiums rising more slowly that expected, government subsidies to purchase health insurance also came in less than expected. Second, via the WaPo: “slightly fewer people are now expected to sign up for Medicaid and for subsidized insurance under the law’s marketplaces. That’s because the agency now says that more people than anticipated already had health insurance before the law took effect, and fewer companies than anticipated are canceling coverage.”
The downward revision since March 2010 to the estimate of the net federal costs of the ACA’s insurance coverage provisions (measured year by year) is attributable to several factors, including changes in law, revisions to CBO’s economic projections, numerous improvements in CBO and JCT’s modeling, the Supreme Court’s decision to allow states to choose whether to expand eligibility for Medicaid, administrative actions, and the availability of new data.Another notable influence is the slowdown in the growth of health care costs covered by private insurance and in the Medicare and Medicaid programs. Although it is unclear how much of that slowdown is attributable to the recession and its aftermath and how much to other factors, the slower growth has been sufficiently broad and persistent to persuade CBO and JCT to significantly lower their projections of federal costs for health care.
dow jones says: the federal debt could total 77% of GDP, more than any year prior to 1950.
obviously, they mean after 1950…our post war debt ratio hit 120%
Your title of the article is misleading. It is true the annual Federal Budget deficit amount appears to be going down but, the year to date budget deficit is going up. Add in the Federal Off the Book and Long Term Liability account deficits, we’re in deep hole with no light at the end of the tunnel. The word in D.C. is, “The Light at the End of the Tunnel Has Been Switched Off”.