Balancing budget over next decade may require cuts to federal programs, CBO says
Cami Mondeaux
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Balancing the federal budget over the next decade could mean significant cuts to several programs that Democrats and Republicans have vowed to protect, according to an analysis by the Congressional Budget Office.
The country is projected to reach a deficit of $2.9 trillion by 2033, which is roughly 7.3% of the country’s GDP, according to the recent report. To eliminate that deficit through spending cuts, the government would need to consider a number of variables that could lead to sacrifices in federal programs.
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Under one plan, lawmakers could reach that goal by gradually reducing all noninterest spending starting in 2024 until that number is 29% less than the agency’s baseline projections in 2033, according to the report. That would mean reducing the amount of money that is spent on noninterest payments each year until 2033.
However, that may be easier said than done. If lawmakers choose to shield some federal programs from spending cuts, the government would need to carve out bigger chunks elsewhere, the report found.
If Congress decides to extend tax cut provisions approved by former President Donald Trump in his signature 2017 tax law, noninterest spending would need to be reduced 35% by 2033, according to the CBO.
The agency also calculated how much noninterest spending would need to be cut if the government decided not to touch certain federal programs or defense spending.
In the case that lawmakers decide not to cut any Social Security spending, the government would need to reduce its noninterest spending by 41% over the next decade, according to the report. Shielding both Social Security and Medicare from spending cuts, however, would result in the government needing to cut its noninterest spending by another 16% on top of that.
Going further, the government would need to reduce its noninterest spending by 86% if lawmakers chose to make cuts without touching Social Security, Medicare, defense spending, or veterans’ programs, the report found.
The report comes as lawmakers seek to balance the federal budget and eliminate the country’s deficit over the next 10 years.
Democrats and Republicans have butted heads on how to reach this goal, with GOP lawmakers pushing for spending cuts as a solution. However, Republicans have also vowed not to cut spending for Social Security or Medicare, putting lawmakers in a tough spot as they consider what areas of the budget to slash.
Democrats have hit out against Republicans for their refusal to cut some program spending, arguing their math “doesn’t add up.”
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“Speaker McCarthy is not going to be able to keep his promise to balance the budget in 10 years while at the same time leaving Social Security and Medicare untouched,” Senate Majority Leader Chuck Schumer (D-NY) said last month. “The math doesn’t add up.”
Democrats have similarly vowed not to cut spending for Social Security and Medicare, instead calling for tax increases on the wealthy to help pay for the programs. Republicans have lashed out against those proposals, maintaining the country’s budget proposal is a “spending problem” rather than a revenue one.