US Government Forecasts Deficit to Stay Under 3% of GDP Until 2018

Solid economic growth over the next few years should help keep the annual federal deficit at a very modest level until 2018. But after that, the deficit will start growing again.

That’s according to the Congressional Budget Office’s latest 10-year budget and economic outlook released Monday.

The CBO projects the deficit for this fiscal year will be $468 billion, or 2.6% of GDP. That’s just slightly lower than where it was in fiscal 2014.

Going forward, the deficit – which reflects the gap between how much the government spends and how much it takes in – is projected to remain at or below 2.6% as a share of the economy until 2018. Thereafter, the CBO expects it to gradually grow to 4% by 2025.

Three reasons were cited for the projected increase in the deficit after 2018. The CBO said it anticipates real growth in the economy will fall below the average growth rate seen in the 1980s and 1990s. At the same time, spending on the major entitlement programs – including Social Security, Medicare and health insurance subsidies – as well as interest on the country’s debt are projected to grow faster than the gross domestic product.

via CNN

via SOURCE

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