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US Federal Deficit Projected to Increase in 2016

| September 22, 2016

The Congressional Budget Office (CBO) recently announced that the US budget deficit is expected to increase in 2016, the first increase since 2009. The CBO estimates that the deficit will be $590 billion (3.2% of economic output) this year, up from $428 billion (2.5% of economic output) in 2015.

The primary reason for the increase in the projected budget deficit is lower than expected tax receipts due to slow economic growth in the first half of 2016.

The CBO projects that the deficit will narrow in the short-term before expanding after 2020 when higher Social Security, Medicare, and interest payments on the national debt are expected to outpace the increase in tax receipts by a wide margin.

With the US national debt already at nearly $19.5 trillion, an expanding budget deficit should be a concern for US citizens. For perspective, the US national debt is currently $162,432 per taxpayer and is increasing at a rate of $4,385 per year. The interest alone on the national debt is $251 billion, or $2,100 per taxpayer. Should interest rates rise, the cost of servicing the debt would likely increase as well.