The US budget deficit this year will come in at $642 billion, the smallest shortfall since 2008 said the Congressional Budget Office in a recent report.
The CBO, tasked with providing nonpartisan budget analysis for the U.S. Congress, estimates that the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.
The good news is tempered by coming higher spending in the years ahead, due to higher health costs and growing interest payments.
[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. By comparison, the deficit averaged 3.1 percent of GDP over the past 40 years and 2.4 percent in the 40 years before fiscal year 2008, when the most recent recession began. During the next 10 years, both revenues and outlays are projected to be above their 40-year averages as a percentage of GDP.
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