January 27, 2015

Economy OK Now, but the Social Security Bill Will Come

The economy will have three years of growth before the government’s deficit weighs the country down, according to a report on the nation’s economic outlook issued by the Congressional Budget Office. By 2025, the federal budget may be returning to a $1 trillion deficit, mostly thanks to an increase in entitlement spending due to ObamaCare and the Baby Boomer generation collecting Social Security. In the short term, the economy will grow because of low oil prices, higher hourly compensation, and more people returning to the workforce and starting households. But the CBO revised its August prediction to say the GDP will only grow 2.5% per year instead of 2.7% because it overestimated how many people are leaving the workforce permanently – possibly for retirement. As James Pethokoukis writes for the American Enterprise Institute, “Let me boil it down for you: These are the good times. Enjoy them because things are unlikely to get much better. In fact, they are likely to get worse.” The economy will shift as the White House administration turns over. Hopefully by then, Washington leadership has enough economic acumen to tackle the deficit, regardless of how it may affect political careers. More…

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