The federal deficit will fall slightly in 2017 and 2018 thanks to shifts in the timing of government payments, the Congressional Budget Office reported Tuesday, but then deficits will rise later in the decade, pressuring the federal government's finances.
Tuesday's report cements the expectation that deficits will no longer continuously decline, as they did after 2010. It is also the first of the Trump administration, although it does not reflect any of his planned policies.
The deficit, the difference between government spending and revenues, is set to decline from $587 billion in 2016 to $559 billion in 2017, according to the office, which is Congress' group of in-house budget experts. That is $40 smaller than projected in August, a change attributable to less-than-expected spending on federal entitlements.
But the smaller shortfall is only a temporary reprieve, and attributable to the fact that the fiscal year started on a weekend. Because Oct. 1, the first day of fiscal 2017, fell on a weekend, $41 billion of payments were shifted forward into the week, meaning they still counted toward fiscal 2016, not 2017.
The deficit is again expected to fall in 2018, also because the fiscal year starts on the weekend, shifting payments forward. But then it is slated to rise indefinitely, adding $9.4 trillion in cumulative deficits in the 10 years through 2027.
That is only a miniscule change in the budget office's most recent previous projections, released in August.
As with previous budget projections in recent years, the nonpartisan office warned that the increasing deficits and mounting debt pose a risk to the U.S., including a greater "likelihood of a fiscal crisis in the United States."
The growing debt, expected to rise from 77 percent of the nation's annual economic output today to 89 percent in 2027, or nearly $25 trillion, reflects "the weighty long-term budgetary challenges facing the nation," according to the office.
Driving the problem is the aging of the population, which will increase the costs of retirement programs such as Social Security and Medicare in coming years.
Those programs, along with increased costs for healthcare programs, will increase spending and red ink even as tax revenues rise, the office foresees. Under current laws, revenues are supposed to rise gradually from 17.8 percent of gross domestic product today to 18.4 percent by 2027, above the 17.4 percent average of the past half-century.