Friday, May 12, 2023

Default cannot be an option. Our fiscal path is unsustainable. Little time to waste in pursuing deficit reduction.

The Committee for a Responsible Federal Budget, MAY 12, 2023 - Today, the Congressional Budget Office (CBO) released its Updated Budget Outlook, which presents a new ten-year baseline that incorporates new legislative and technical (but not economic) changes since last February.

CBO projects the budget deficit will total $1.5 trillion this year and rise to $2.9 trillion by 2033. It also projects the national debt will reach a record 107 percent of the economy by 2028 and grow to 119 percent by 2033. In total, debt will rise by $22 trillion between now and the end of the decade.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

If ever negotiators needed a sign they should be pursuing deficit reduction, this is it. We absolutely must raise the debt limit as soon as possible – without drama and without any threat of default. At the same time, inflation and interest rates are too high and our fiscal path is unsustainable. We need over $8 trillion of ten-year deficit reduction just to hold debt at its current share of the economy.

CBO’s report shows clearly why any plan to fix the debt will ultimately need to include changes to Social Security, Medicare, and the tax code. But real progress can be made focusing on other areas of the budget, including by enacting multi-year discretionary spending caps.

Congress and the President should work quickly to enact some budget savings and reforms. They should appoint a commission or establish another process to address the rest of the budget.

With inflation surging and debt approaching a record share of the economy, there is little time to waste. And with the debt limit deadline well in sight, lawmakers must act as soon as possible to make sure the country can pay its bills. Default cannot be an option. 

The Committee for a Responsible Federal Budget is a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact. 

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