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Tuesday, October 25, 2016

WASHINGTON — The federal deficit is likely to continue its slide — to a lower-than-expected $514 billion for 2014, the nonpartisan Congressional Budget Office reported Tuesday.

Down from last year’s $680 billion, the current deficit projection would mark the lowest level since President Barack Obama took office.

However, the nation’s sluggish economy still poses long-term budget challenges for Congress.

Thanks to budget slashing and improved tax revenues, the years of record-high red ink, which ran at $1 trillion annually during the recession, appear to have receded for the foreseeable future. The deficit is now back to historical averages of about 3 percent of the nation’s gross domestic product, the budget office reported.

But the economy’s projected growth is less than once hoped, at a time when the nation’s population is aging and will continue to put pressure on federal programs, such as Medicare.

Although public concern over federal spending does not dominate the polls as it did just a few years ago, the accumulated debt has continued to mount.

“The federal budget has fallen sharply,” the CBO said in its annual budget outlook, noting that all federal spending except for Social Security and the healthcare programs dropped to the lowest share of GDP since 1940, the earliest year when comparable records were kept.

Nevertheless, the CBO said the economy will continue to have some “slack,” with a projected 6 percent jobless rate for the decade. The combination of an aging population and a decline in workforce participation is expected to shave economic growth.

The budget office also said the new health care law, the Affordable Care Act, will play more of a role in shifting labor market participation than previously understood. It is expected to cut the equivalent of 2.5 million full-time jobs from the economy over the decade, largely as lower-wage workers reduce their hours once they become eligible for federal subsidies to defray their health costs.

Overall, the “slack” in the economy means the budget office has revised its growth expectations and that lower revenues are projected to send deficits climbing again in a few years.

Photo: Speaker Boehner via Flickr

  • Independent1

    I wonder who has that crystal ball at the CBO?? Now, suddenly, the CBO is able to fortell the future!! and claims that because the Obamacare subsidies will take financial pressure off of millions of low wage workers, that these supposed slackers will decide they don’t need to work as hard anymore and will therefore reduce their work hours to the tune of 2.5 million full time jobs!! Wow!! I wonder what Republicans slipped some money under the table to those prenosticators to come up with those kind of wild projections??

    It wasn’t bad enough that without a clue as to how Americans would act in signing up for Obamacare, and just what states would and wouldn’t even promote it, that the CBO came up with a mythical 7 million Obamacare enrollment projection for 3/31/2014!! And, as if that wasn’t bad enough, now they’re trying to project how low wage workers will react when they have a few extra bucks in their pockets during the remainder of the decade, just because the Obamacare subsidy will give them some extra cash. Wow!! Maybe the CBO should set up a separate sideline and open up some fortune telling booths!!

    As if the CBO’s history of misguided projections isn’t bad enough, it’s hardly any better than today’s weather forecasters trying to predicate the weather two weeks in advance.

    • Dominick Vila

      GOP lawmakers wasted no time jumping on the bandwagon and spinning the latest ACA prediction. I heard them on CNN last night claim that 2 million people will lose their jobs as a result of Obamacare. The fact that ill or handicapped American may leave the jobs they have because it is no longer necessary to go to work when you can barely move or cope with pain to make sure you have affordable healthcare is being portrayed as a negative, and the fact that the jobs those persons are currently doing will, allegedly, become available to unemployed Americans is, not surprisingly, being ignored. What the GOP lawmakers did not realize is that in their zest to demonize Obamacare they acknowledged how beneficial and effective ACA is to millions of Americans.
      Something else that they don’t seem to understand is that insinuating that people who cannot go to work are bums dependent on government handouts is offensive to most rational people. Those who may quit their jobs and stay at home or work part time because their debilitating illnesses are too severe are not bums, they are as vulnerable as the rest of us. The GOP is, once again, demonstrating its inhumanity, ignorance, prejudice, and a tendency to do or say abominable things to score political points.