Federal Budget Outlook? Not So Good

There's no equivalent to Coachella, but for the budget wonk there's a few dates to be circled heading into the summer.

First up, the Congressional Budget Office is set to release its annual long-term budget outlook July 16 at 10 a.m. EDT. The report takes a look at the longer-term trend in the U.S. fiscal picture over the next 25 years.

As with most budget outlook reports, it is expected to be gloomy. 

Gloom on Capitol Hill

In last year’s report, the CBO said the fiscal gap—the size of changes needed to keep the debt/GDP proportion stable over time—was equal to a 5.5 percent cut in spending, or about a 6 percent hike in revenues. In other words, to keep the debt ratio stable by the end of the 40-year period, spending cuts or tax increases of those sizes, measured in relation to the size of the U.S. economy, would need to be made every year.

To bring the debt down to a more normal 38 percent of GDP over the 40-year span would require larger changes, 14 percent on the revenue side or 13 percent on the spending side.

The budget committees on Capitol Hill have often held hearings when the report comes out, though none had been scheduled as of June 24.

Also in July is the deadline for the midyear budget update from the White House’s Office of Management and Budget. The deadline is July 15, though the Obama administration has sometimes missed it. The OMB has not said when it expects to release the report, which updates its budget and economic projections released in February.

Finally, in August, the CBO is likely to release its own mid-fiscal year update. The CBO last updated its budget projections in March. The date usually falls in the latter part of August historically, though it can slide into September.