The nonpartisan Congressional Budget Office (CBO) projects a deficit of $590 billion for Fiscal 2016, a 10.5% hike up from the $534 billion projection in March and up by more than a third over the $439.1 billion shortfall in 2015 and the first time the deficit would increase as a share of the economy since 2009.
CBO, the official scorekeeper of all budget matters, said lower-than-expected revenues drove the deficit higher. CBO did not provide further details on projections for the full fiscal year, which ends Sept. 30, but the agency said it would publish more detailed estimates later this month. In one troubling sign, however, the report said corporate income taxes for the first 10 months of the current fiscal year were 14% lower than they were in the same period last year.
The revised deficit numbers bring the CBO forecast closer to the $600 billion estimate from the White House Office of Management and Budget, issued last month. The two forecasts now stand just $10 billion apart, after the White House revised its estimate downward by $16 billion since its February budget release.
The deficit fell to a recent low of $438 billion in Fiscal 2015, after hitting a peak of $1.4 trillion in Fiscal 2009 at the height of the 2007-09 recession. Unless current laws are changed, the deficit is on course to resume climbing, reaching $1 trillion again by 2022, mostly because of soaring health care and Social Security costs, according to the CBO.
As the deficit grows, look for spending battles to get uglier as the election season showdown on appropriations nears.