The Congressional Budget Office has released a new projection that it expects a deficit of $3.5 trillion in the next 10 years, markedly lower than the March CBO forecast of $6.7 trillion.
The CBO's recent update on the budget and economic outlook showed the decline in expected deficits is largely due to the recently passed Budget Control Act, which features caps on discretionary spending and other deficit reduction measures including possible cuts to federal healthcare programs. Specifically, the CBO estimates that approximately two-thirds of the reduction in projected deficits stems from the effects of the Budget Control Act.
The CBO cited "sharp reductions" in Medicare payments to physicians, which take effect at the end of this year, as one of several policies in current law acting as contributing factors to the reduced deficit projection. If this change in Medicare payments did not occur, CBO estimates annual deficits from 2012-2021 would average 4.3 percent of GDP, compared with 1.8 percent in its current baseline projects.
Overall, the CBO predicts economic growth will be restrained for several more years, and real GDP will rise at a modest rate, on average, through 2013.
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The CBO's recent update on the budget and economic outlook showed the decline in expected deficits is largely due to the recently passed Budget Control Act, which features caps on discretionary spending and other deficit reduction measures including possible cuts to federal healthcare programs. Specifically, the CBO estimates that approximately two-thirds of the reduction in projected deficits stems from the effects of the Budget Control Act.
The CBO cited "sharp reductions" in Medicare payments to physicians, which take effect at the end of this year, as one of several policies in current law acting as contributing factors to the reduced deficit projection. If this change in Medicare payments did not occur, CBO estimates annual deficits from 2012-2021 would average 4.3 percent of GDP, compared with 1.8 percent in its current baseline projects.
Overall, the CBO predicts economic growth will be restrained for several more years, and real GDP will rise at a modest rate, on average, through 2013.
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