CBO: Deficit to grow in 2015

The annual budget deficit will rise to $486 billion in fiscal 2015, slightly higher than the government’s shortfall last year, the nonpartisan Congressional Budget Office (CBO) projected Monday.
 
The latest deficit estimate is $18 billion higher than CBO had originally projected for 2015, and represents 2.7 percent of gross domestic product (GDP).
 
CBO said Monday the estimated rise in the deficit stems mostly from a projected rise in mandatory spending—mainly for student loans, Medicaid and Medicare.
 
Medicare spending will rise from 10 percent of GDP in 2015 to 11.8 percent of GDP in 2025, and Medicaid spending will increase modestly from 1.9 percent of GDP to 2.1 percent of GDP in 2025.
 
CBO had projected for a while that the government’s budget deficit would continue to fall and then rise. In its Monday report, it said the deficit in 2025 would reach $1 trillion.
 
Debt is expected to equal 73 or 74 percent of GDP over the next few years and will equal 77 percent of GDP by 2025, CBO said Monday.
 
At the same time, CBO’s updated projections found the cumulative deficits over the next nine years would be $431 billion less than its January projection of $7.6 trillion. The budget office said growth in private heath insurance spending is expected to be lower than expected, which will lower the net cost of ObamaCare’s provisions.
 
CBO and the Joint Committee on Taxation (JCT) project that ObamaCare’s insurance provisions will result in a net cost of $1.3 trillion over the next 10 years — about 11 percent less than the agency predicted in January.
 
The decrease in gross costs is due to lower projected spending for insurance subsidies through the ObamaCare insurance exchanges, the Children’s Health Insurance Program (CHIP) and Medicaid, CBO and JCT said.
 
Both budget scorekeepers said new information about the sources of health insurance overage and the number of people without coverage in previous years led to a slightly lower estimate of the number of people who will receive health coverage through ObamaCare.
 
CBO and JCT estimate that ObamaCare will reduce the number of people without healthcare insurance by 24 to 25 million.
 
As a result of technical changes and legislation enacted since CBO’s January projections, the budget office now expects the government to take in $3 billion more in taxes for 2015 and $77 billion more over the next nine years.

This story was updated at 11:40 a.m.