On January 25, 2016 the Congressional Budget Office (CBO) released a report on the budget and economic outlook for 2016-2026 estimating an increase in the federal deficit for the first time in six years. The CBO estimates that the 2016 deficit will be $544 billion, $105 billion more than the deficit recorded in 2015.
Federal outlays are projected to rise by 6 percent in 2016—to $3.9 trillion, or 21.2 percent of GDP. That increase is the result of a nearly 7 percent rise in mandatory spending, a 3 percent increase in discretionary outlays (which stem from annual appropriations), and a 14 percent jump in net interest spending.
CBO anticipates that mandatory outlays will be $168 billion higher in 2016 than they were last year. More than 60 percent of the projected growth in mandatory spending is attributed to outlays for Medicare (net of premiums and other offsetting receipts), Medicaid, and the Children’s Health Insurance Program, plus subsidies for health insurance purchased through exchanges and related spending which are expected to be $104 billion (or 11 percent) higher this year than they were in 2015. Medicare spending specifically is expected to rise by 5.2 percent in 2016.
A Congressional hearing on the report is scheduled for January 27, 2016 at 9:30 am ET.
