The federal deficit will rise by about one-third to $590 billion in fiscal 2016, the Congressional Budget Office projected Tuesday, guaranteeing that President Obama will leave office with a growing deficit.
The annual shortfall would be $152 billion larger than the deficit for fiscal 2015 and the first increase in the deficit, relative to the U.S. economy, since 2009.
The Congressional Budget Office, Congress' official, nonpartisan agency for estimating the financial impact of legislation, attributed the widening deficit to growth in government spending, at 5 percent, outstripping that of tax revenue, at 1 percent, over the past year.
A quirk of the calendar also will contribute to the size of the shortfall, however. Because Oct. 1, the first day of the next fiscal year, falls on a weekend, the government will make some payments early, meaning that they will fall in fiscal 2016.
Tuesday's report, a regularly scheduled budget update, hints at looming fiscal problems for the U.S.
Deficits, which are the annual gap between government taxes and spending, have fallen sharply during Obama's tenure as the country heals from the financial crisis. But they are set to continue growing indefinitely as spending on interest on the debt and retirement and healthcare problems increases.
The budget office sees the deficit rising to $594 billion in 2017, slightly above the historical average relative to the size of the U.S. economy. The deficit will fall slightly in 2018, thanks again to the time-shifting of payments and the economy continuing to recover, but then resume rising as a share of the economy and hitting $1 trillion by 2024.
The report shows that "the days of declining deficits are over," remarked Shai Akabas, director of fiscal policy at the Bipartisan Policy Center, a Washington think tank. "With deficits on track to grow every single year for the next decade and beyond, this is a problem that the next president and Congress cannot afford to ignore."
Over the next 10 years, the U.S. will run a cumulative deficit of $8.5 trillion, according to the budget office.
That's nearly a trillion dollars less than the office projected in January. Since then, the analysts at the budget office have marked down the prospects for the U.S. economy. That alone would make the budget picture worse, but they also now anticipate that interest rates will be lower, enough to save the Treasury nearly $1 trillion on payments on the debt.
But because economic growth was also revised down, the debt is still expected to rise relative to the economy, from 77 percent today to 86 percent in 2026, not a significant change from earlier projections.
The office included in the report a now-standard warning that the ever-increasing projected debt would have "serious negative" consequences for the country, including the possibility of a fiscal crisis.