Grassley Statement and Fast Facts on Budget and Economic Outlook

WASHINGTON – The Congressional Budget Office (CBO) today released The Budget and Economic Outlook: 2023-2033. This new report contains CBO’s projections about how the budget and economy will look under existing laws for the next decade. The report also confirmed that the Democrats’ so-called Inflation Reduction Act would in fact add to inflationary pressures over the next two years.
Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Budget Committee, issued the following statement about that report.
“This report paints a dire picture. If we don’t get serious about reining in spending, reducing annual budget deficits and bringing down the debt, the country will end up spending more on interest payments than the programs that actually benefit Americans. Not to mention, continued inattention to these matters will have significant economic consequences.” Grassley said.
CBO Budget and Economic Outlook:
  • New record debt levels on the horizon. By 2033, debt held by the public will be 118% of gross domestic product (GDP), which will be higher than any point in our nation’s history. Due to the growth in debt service costs and mandatory spending, CBO projects public debt will soar to 195% of GDP in 2053.
  • Deficits, deficits, deficits. The 2024 deficit will total nearly $1.6 trillion, an increase from the 2023 projection of $1.4 trillion. Deficits will average $2 trillion over the budget window, culminating in a $2.9 trillion deficit in 2033. Cumulative deficits over the 2024-2033 window exceed $20 trillion.
  • Higher Unemployment and Economic Stagnation. CBO now projects much weaker economic growth and higher unemployment this year than they did last year. The unemployment rate is expected to exceed 5 percent by the end of the year, while real GDP growth slows to a crawl of just 0.1 percent.
  • “Inflation Reduction Act” Only Worsens Inflation. CBO confirms that Democrats’ so-called “Inflation Reduction Act” will actually increase inflation, which the agency now expects will remain above the Federal Reserve’s target until 2027.
  • Tax collection is high and spending is out of control. Over a ten year period, CBO projects that spending and revenues will exceed their 50-year historical averages of 21% and 17.4% of GDP, respectively, with spending averaging 24% of GDP and revenues averaging 18% of GDP over the budget window. After adjusting for timing shifts, outlays will total 24.9% of GDP in 2033 and revenues will total 18.1% of GDP that same year.
  • Higher rates and mounting debt cause interest costs to explode. Net interest costs will rise by 35% in 2023—growing from $475 billion in 2022 to $640 billion in 2023. Annual interest costs will total $739 billion in 2024 but double to $1.4 trillion by 2033. Beginning in 2028, net interest costs will eclipse what the nation spends on national defense.
  • Major trust funds depleted within 10 years. CBO continues to project upcoming exhaustions for several major federal trust funds: Social Security’s Old Age and Survivors Insurance Trust Fund (2032), Medicare’s Hospital Insurance Trust Fund (2033), and the Highway Trust Fund (2028).