Douglas Holtz-Eakin, a former director of the Congressional Budget Office, has an article in today’s Wall Street Journal, in which he predicts — correctly in my opinion — that we are headed for a fiscal iceberg.
Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion — the highest since World War II — as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.
Going forward, there is no relief in sight, as spending far outpaces revenues and the federal budget is projected to be in enormous deficit every year. Our national debt is projected to stand at $17.1 trillion 10 years from now, or over $50,000 for every American. By 2019, according to the Congressional Budget Office’s (CBO) analysis of the president’s budget, the deficit will still be roughly $1 trillion, even though the economic situation will have improved and revenues will be above historical norms.
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