We told you yesterday that the federal government appears to be headed for $1 trillion annual deficits faster than the Congressional Budget Office projected earlier this year, with Goldman Sachs forecasting a budget shortfall of $1.025 trillion in 2020, two years earlier than the government scorekeeper had forecast. Now it looks like we may reach the trillion-dollar mark even sooner than that.
A report released Thursday by the Bipartisan Policy Center forecasts that the deficit could surpass $1 trillion as soon as fiscal 2019. The BPC analysis assumes that Congress will pass a tax bill early next year that adds $1.5 trillion on top of the $10 trillion in cumulative deficits that CBO projected through 2027. Given calls from lawmakers of both parties for increased spending for various priorities, the report also assumes that Congress will repeal the mandatory spending caps that took effect in 2013. And it projects that federal disaster relief costs for hurricanes, fires and floods will be about $200 billion over the next 10 years.
The BPC report adds that this escalation in deficits isn’t a foregone conclusion. “It is not too late for policymakers to take action to put the federal government on a path to fiscal sustainability,” it says. “As the former public trustees of Medicare and Social Security warned, our most important social programs that are the key drivers of our debt need to be addressed soon to avoid sharp benefit cuts or tax increases. However, given past inaction, we believe significant congressional reform efforts of entitlement programs, the driver of most of the deficits during the 37-year period studied, will continue to be nearly zero in the next year.”