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The Congressional Budget Office on Monday lowered its deficit projections but still forecasts a sea of red ink for the nation’s fiscal future.
The nonpartisan CBO said the deficit will drop in 2014 to $492 billion from the $514 billion in had forecast in February.
The projected 2015 deficit would be the lowest since 2007 when it was 1.1 percent of GDP. It rose after that to 9.8 percent by 2009, as the President Obama sought to stimulate the economy through spending in the wake of a deep recession.
But the CBO said projected deficits will quickly expand again, with the deficit reaching 4 percent of GDP by 2022.
And by 2024, the federal debt is estimated to reach 78 percent of the economy, twice the 39 percent average of the past four decades.
The budget office warned that the aging of the population, rising healthcare costs and increasing interest payments on the debt will bring about the return to $1 trillion deficits by 2024 in the absence of legislative changes.
The CBO said cumulative deficits over the next decade will total $7.6 trillion if current laws remain unchanged. That’s a drop of $286 billion from the deficit projections of two months ago.
The gross federal debt will rise from approximately $17.7 trillion this year to $27 trillion by the end of the next 10 years. Most of the decline in the deficit for 2014 is due to lower estimates for discretionary spending.
For the 10-year total, however, the major cause is lower spending on healthcare payments under ObamaCare and under Medicare, the CBO said.
The 2014 deficit would be nearly one-third less than the $680 billion deficit from fiscal 2013. which ended in October and is far lower than the $1 trillion deficits recorded in each of the years of Obama’s administration prior to that.
Most of the reduction in ObamaCare subsidies comes from lower technical estimates of the premiums insurers participating in healthcare exchanges will charge.
Affordable Care Act subsides would be $186 billion less over 10 years than previously thought, the CBO said, while Medicare spending would be $98 billion lower.
Updated at 12:10 p.m.
