Bigger budget deficts coming

After a number of years of improvement, the government’s annual budget deficits have taken a turn for the worse.

The Congressional Budget Office released a new report Aug. 23 forecasting that the deficit for the current budget year, which ends Sept. 30, will be $590 billion. That is up one-third from last year’s deficit of $438 billion. The 2015 deficit was the smallest in eight years and marked a further improvement after four years of $1 trillion-plus annual deficits. The new CBO forecast is $56 billion larger than the agency’s previous forecast in March, primarily because tax revenues have been lower than expected this year.

The CBO still sees steadily rising deficits over the next decade, reflecting higher Social Security and Medicare payments as baby boomers retire. But because CBO believes interest rates will be lower, the government will have to spend less to finance the debt.

CBO projects deficits over the 10-year span will be $712 billion lower than it projected in March. That would still add a total of $8.57 trillion to the national debt over that period.