Updated Budget Projections: 2019 to 2029

As it typically does each spring, the Congressional Budget Office has updated the baseline budget projections it published early in the year. If no further legislation is enacted this year that affects the federal budget, the total federal deficit for fiscal year 2019 will be nearly the same as the agency estimated it to be in January 2019, according to CBO’s projections. If current laws remained unchanged, the deficit would generally increase in nominal terms through 2029 and would be considerably larger as a share of the nation’s output (gross domestic product, or GDP) than its average over the past 50 years, CBO estimates. As a result, debt held by the public would rise significantly from its already high level.

Growing Deficits Are Projected to Drive Up Debt

Revenues and outlays are both projected to rise through 2029, but the gap between them is projected to persist, resulting in large deficits and rising debt. According to CBO’s estimates, the deficit now projected for 2019, $896 billion, would grow to $1.3 trillion by 2029. However, outlays for 2029 are affected by shifts in the timing of certain federal payments. Without those shifts, the projected deficit in 2029 would be $1.4 trillion.

Relative to the size of the economy, the deficits that CBO projects would average 4.3 percent of GDP over the 2020–2029 period. Other than the period immediately after World War II, the only other time the average deficit has been so large over so many years was after the 2007–2009 recession. Over the past 50 years, deficits have averaged 2.9 percent of GDP (see figure below).

Persistently large projected deficits would lead to significant growth in debt held by the public. Under current law, the federal government is projected to borrow an additional $12.7 trillion from the end of 2018 through 2029, boosting debt held by the public to $28.5 trillion, or 92 percent of GDP, by the end of the period—up from 78 percent now.

Beyond 2029, if current laws remained in place, deficits would grow, driving debt to its highest levels in the nation’s history. Those large deficits would arise because outlays—particularly for Social Security, Medicare, and interest on the debt—would rise steadily under current law, and revenues would not keep pace with the growth in spending.

Changes Since January Are Relatively Small

CBO currently projects a deficit for 2019 of $896 billion, only $1 billion smaller than the deficit it projected in January. The cumulative deficit projection for the 2020–2029 period has dropped by $249 billion (or 2 percent), largely as a result of a $333 billion decrease in outlays, which is partially offset by an $84 billion reduction in revenues.

CBO’s updated budget projections are based on the same economic forecast the agency developed for its January 2019 baseline, and legislation enacted since January has had only a modest effect on the budget totals for the 2019–2029 period. CBO did not fully update its baseline projections of revenue for this report but expects to do so later this year. Thus, the reduction in the cumulative deficit largely stems from technical changes that lowered the agency’s projections of outlays for mandatory spending and net interest.