Hi everyone, welcome back to Fiscal Friday, this is Bess Byers with A Generation Empowered. On Tuesday the bipartisan Congressional Budget Office released their annual Ten-Year Budget and Economic Outlook. Economic outlook? Not so good. Today we’ll look at three of the CBO’s major findings.
1. Deficits are gonna go up. Sure the current admin hails the deficit as down (half a trillion is nothing to brag about) and the CBO estimates the 2015 FY deficit will be $468 billion. However, deficits will slowly climb and by 2025 we’re estimated to hit a $1.1 trillion deficit. Why the spike? Retirement (Social Security) for the baby-boom generation, expanding federal subsidies for healthcare, increased costs per beneficiary and rising interest rates on our current federal debt. Only the Federal Government could get away with ten years of deficits and still not go bankrupt.
2. Revenues (taxes) are gonna go up too. The CBO estimates a $2 trillion dollar revenue increase, to $5 trillion in annual taxes. Think taxes won’t affect you? Guess again. Individual tax revenues will increase based on a government trick called “Real bracket creep.” Basically inflation-adjusted income pushes people (you) into higher tax brackets.
3. The Affordable Care Act is not affordable. The CBO finds over the next ten years, Obamacare will add $1.35 trillion to our national debt. That breaks out to $50k per person, while still leaving an estimated 30 million non-elderly Americans uninsured.
TBH I could go on for days. The final report is 184 pages and my brain is exploding. Millennials, we’re getting screwed. The real question… Why does this matter? Interest rates will inevitably rise eating up more of our budget. High debt means policymakers have less flexibility to respond to economic challenges. Rising debt relative to our economy dampens economic growth and reduces incomes. Additionally, it increases the cost of borrowing and reduces lending to you, the millennial entrepreneur.
The CBO predicts our debt will hit $19.1 trillion by the time Obama leaves office. With an estimated debt of $27 trillion by 2025, the current budget is pretty dang unpatriotic.
This is Bess Byers, signing off, and remember, it’s your generation and you’re empowered!