New year, same fiscal warnings

New year, same fiscal warnings. The Congressional Budget Office has released their annual long-term budget outlook for 2017 and, likely to nobody’s surprise, the results are eerily similar to their previous predictions.

In the new report, CBO estimates that the federal debt will reach 150% of GDP by 2047, nearly doubling the 77% of GDP that it is at currently. The main driver behind this massive increase is the growth of the deficit. With the growth of retirees trending upward, the outlays for Social Security and Medicare are projected to vastly outpace the government’s revenues. This—in combination with the growing costs of healthcare—will only make the problem worse for the U.S economy.

Though these projections are similar to the numbers from the July 2016 report, their estimates this year have a slightly more dismal outlook. They now project debt in 2046, measured as a share of GDP, to be 5 percentage points higher than they did in last year’s estimate.

In addition, CBO predicts that the growth of federal debt will reduce federal savings and increase the cost of interest on the debt—forcing more pressure on other parts of the budget. CBO points to two potential problems with accumulating high debt. First, they predict it will lead to a decreased ability to respond to problems both domestically and internationally. Additionally, it may lead to a greater chance of a fiscal crisis because investors will be unwilling to finance federal borrowing.

There is uncertainty with these projections, of course. They are directly related to the labor force participation rate, growth of productivity, interest rates on the debt, and costs of mandatory spending. Any large changes to these parts of the economy will result in different outlooks—which, depending on the circumstances, could be a good or bad thing.

In order for the government to get spending under control, there will have to be massive changes to political habits. If lawmakers aimed to decrease the debt to equal 40% of GDP by 2047—which is the 50-year average—they would have to cut non-interest spending by 15%. Even more frightening, if politicians want to keep debt at the current levels of 77% of GDP, they would still have to cut by 9%, or $1,100 per person. For a federal government that continues to grow year after year, this is a tall order.

Currently, the United States is headed down a road of fiscal insolvency. If changes aren’t made, the likelihood of an economic crisis grows exponentially. CBO has been warning Congress for years to take spending cuts seriously and only a few Members have taken action toward change. It is going to take some serious leadership to attempt to shrink the budget, but as CBO warns again, it must be done before we face severe problems not too far down the road.

This post originally appeared at the Institute to Reduce Spending.

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ICYMI: Jonathan Bydlak on the Bob Zadek Show

There’s a lot going on in Washington these days, but we’re hard at work making sure no vote goes unnoticed.

In case you missed it, Jonathan Bydlak recently sat down with Bob Zadek to discuss our work to track spending and why doing so is the cause of our generation.

Take a listen here!

Jonathan Bydlak in The Hill: Trump tweets, EOs mask lack of progress on biggest national issues

With today’s contributor debut in The Hill, Jonathan Bydlak takes on a nagging issue for fiscal conservatives: What’s going on with spending policy?

Last week, congressional leaders dusted themselves off and began moving forward with a second attempt to repeal ObamaCare. It remains unclear whether a coalition can be cobbled together to pass a bill that pleases both moderates and conservatives, but if so, it will mark the first time the new administration presides over anything that impacts the most pressing national issues — spending and debt.

…By this time in 2009, then-President Obama had signed 12 bills into law, including the American Recovery and Reinvestment Act ($663 billion), the 2009 Omnibus Act ($410 billion) and the Children’s Health Insurance Program (CHIP) Reauthorization Act ($73.8 billion), totaling roughly $1.1 trillion in spending. No doubt these bills represented the foundation of Democratic priorities at the time.

In contrast, President Trump has thus far signed a grand total of…one bill with significant spending implications — the reauthorization of NASA. Indeed, the Congressional Budget Office (CBO) has opted to score only only two of the laws enacted this session. Officially naming clinics in Center Township, Pennsylvania and Pago Pago, American Samoa may be worthy efforts, but they hardly represent a heavy lift.

And while the House has voted on eight bills with spending implications, the Senate has yet to address a single one. Are we living in a post-fiscal world? Not quite.

Read the full piece here, and please consider standing with us as we continue to work to make sure spending is never forgotten.

Coalition supports the FAST Generics Act

Today, we were thrilled to see the introduction of common-sense legislation that will take aim at an area long overdue for reform: Expensive prescription drugs and the regulations that enable monopolies and high prices.

Representatives Peter Welch (D-VT) and David McKinley (R-WV) on Friday introduced the “Fair Access for Safe and Timely Generics Act of 2017,” or the “FAST Generics Act of 2017.” The bill would provide a path to relief for generic manufacturers who are being blocked from entering the marketplace.

We were proud to sign onto a letter of support alongside 18 other organizations. Read the full letter here.

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David Abroms (GA-6) explains why he pledged to Reject the Debt

The race to fill the open seat in Georgia’s 6th district is attracting nationwide headlines, but one issue getting less focus is nevertheless one of the most crucial for any race: Which candidates are serious about reducing spending and debt?

Attempting to find answers to this question is why the Coalition to Reduce Spending sends every federal candidate a copy of the Reject the Debt pledge. This simple commitment asks candidates not to vote for unbalanced budgets or for new spending that is not offset with cuts, and it’s been signed by stalwart leaders such as Rep Jody Hice (GA-10), Rep. Jim Banks (IN-3), and Sen. Ted Cruz (TX).

To date, David Abroms is the only candidate to sign in the GA-6 race. He explained why in a recent note he sent to the Coalition:

By signing the Coalition to Reduce Spending’s “Reject the Debt” pledge, I’m proud to say that I’ve taken an important step towards restoring fiscal sanity in Washington.

Voting by the guidelines set forth in this pledge, I’ll reject Washington’s irresponsible spending, restore balance to the budget, and reduce the national debt.

It’s a fact of life that our country is going broke. My generation will be faced with a budget crisis unparalleled in our history if we continue on our current path of reckless regulation, borrowing, and spending. We must get our financial house in order before it’s too late.

That’s why I signed this pledge, because I believe that I will have no more important job as your congressman than working to secure the welfare of the people of Georgia’s 6th district, the state of Georgia, and our nation.”

Last fiscal year, our government collected $3.3T in tax revenue while our national debt rose to nearly $20T. That means our debt is 6 times to total amount of revenue our government collects in a year, while still adding over $500B to the debt every year. As interest rates increase, the interest on the debt will burden our government to such an extent that we will not be able to afford the most basic needs of our government. Debt will put every government program in jeopardy, including the intelligence and defense departments which we need to keep viable in order to insure our national security. America will not be the super power in the world if we do not get our debt under control.

In business, I always understood that you can not build a viable business on debt, and the rules aren’t any different for our country. I am only 33 years old, but I remember when I was younger, our national debt was $4T, and in my short life it has risen to $20T. This is unacceptable. This is such a serious problem that it will require serious bipartisan solutions to tackle this enormous challenge. I will not sit quietly while our country falls into financial chaos. If it does, it will be the least advantaged among us that will suffer the most. We have seen this happen throughout history. Let’s learn the lessons so we do not repeat them.

We’re proud to have Mr. Abroms stand with us in our mission and would urge his fellow candidates to follow his lead and go on the record to Reject the Debt!


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