CBO Releases Long-Term Budget Outlook Projecting Smaller Deficits Through 2018 and more
Advocacy at a Glance offers you the bullet point summary of current advocacy issues associated with the goals of the Alliance for a Stronger FDA.
CBO Releases Long-Term Budget Outlook Projecting Smaller Deficits Through 2018. This week the Congressional Budget Office (CBO) released its 2014 long term budget outlook, making baseline projections on the federal budget through 2039. There was some limited good news from the CBO in that the budget deficit has shrunk from a high of nearly 10% of GDP in 2009 to 3% currently. CBO attributes this to the gradual economic recovery and changes to tax and spending laws. However, the CBO expects this to be only a temporary dip in the deficit, projecting that beyond 2018, under current law, the federal budget deficit will continue to climb due to pressures stemming from growth in mandatory spending programs (Medicare, Medicaid, and federal subsidies for health insurance) and rising interest rates. From the perspective of the overall national debt, the federal debt held by the public equals about 74% of the economy’s annual output, or gross domestic product (GDP). This is the highest it has ever been, except for a brief period during World War II.
CBO Predicts More Government Spending in the Long Term and Also Projects Important Changes as to Where the Government Spends Its Money. Over the longer term, CBO projects that federal spending will continue to grow to reach 26% of GDP in 2039, compared to 21% in 2013. CBO sees the spending drivers as mandatory spending programs (health programs and Social Security) and net interest. CBO points out that it expects interest rates to rise in the future, and as interest rates rise, so will also rise the cost of government borrowing. In addition to generally higher government spending as a percentage of the economy, CBO also sees a change in where government prioritizes its spending. Specifically, CBO projects that as mandatory and interest spending increase, discretionary spending will decrease. This means that there will be less federal money spent on the military, education, transportation, and research as a percentage of GDP, and shows the continuing macro-budgetary challenges facing the FDA budget.
How Is Congress Doing? A number of analyses say: “not well.” First, a recent Gallup poll determined that only 7% of respondents had high confidence in Congress. Second, the publication, The Hill, did an analysis of congressional legislative accomplishments, and determined Congress is on track to pass fewer substantive bills during this 2-year session compared to the last 2-year session (which was already at historic lows). And, Congress has limited time to accomplish anything further. There are 2 weeks left in July before Congress takes its traditional August in-district work session. Congress returns in September for a few weeks, and many are now predicting the House may leave for home districts and election-year activities even earlier than expected. The major item Congress needs to accomplish is passing spending bills for the Fiscal Year 2015 by the beginning of the October 1st start of the fiscal year. Most anticipate that it will merely pass short-term spending measures to get through the elections. For more on this, see this week’s Analysis and Commentary.