Perhaps you’ve heard President Obama’s talking point that the federal budget deficit has fallen by two-thirds on his watch. That overlooks that the deficit first soared on his watch, and then fell thanks largely to the GOP House and modest economic recovery, and that as he leaves office he is going to need one more asterisk: The deficit in 2016 has begun to rise again, in dollars and as a share of the economy. And after he leaves office, it takes off.
That was the news Monday in the Congressional Budget Office’s largely ignored annual budget and economic outlook. CBO’s gnomes estimate that the annual federal deficit will increase this year after six years of decline—to $544 billion from $439 billion in 2015. It will also rise as a share of the economy to 2.9% from 2.5%. The nearby table tracks the numbers across the Obama post-recession era.
This deficit increase by itself shouldn’t cause great alarm, but the reasons to care are the explanation and the trend. The deficit is rising again largely because spending is climbing rapidly again, an estimated 6% this year, or triple the rate of inflation. As a share of GDP spending will climb by 0.5-percentage points to 21.2%.Read the rest of this WSJ op-ed HERE.
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