There is a bit of good (or less bad) economic news these days. The federal budget deficit is much lower than anticipated. According to CNBC, “A new report released Tuesday by the nonpartisan Congressional Budget Office (CBO), estimating that the deficit for this fiscal year, which ends on Sept. 30, will fall to about $642 billion, or 4 percent of the nation’s annual economic output, about $200 billion lower than the agency estimated just three months ago.”
What does this mean for taxpayers? Not much, or at least this is not really good news. After all, the budget deficit is still more than half a trillion dollars. With the rising costs of healthcare and entitlement programs slated to grow markedly over the next few decades. According to CBO, while the decrease in budget deficit is less bad than in the past, little is likely to change without major policy changes to how the government spends money. CBO predicts, “Budget shortfalls are projected to increase later in the coming decade, reaching 3.5 percent of GDP in 2023, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.”
The long and short of it is, policy makers should take this news with a grain of salt and continue to find ways to direct the country onto a path of fiscal responsibility.