Grim economic outlook

Congressional Budget Office Director Peter Orszag is playing a role he admittedly hates: the grim economist. The CBO released the annual summer update to its Fiscal Outlook for 2008 to 2018.

On the "Director’s Blog," Orszag explains the economic report and gives it context, including what the takeover of mortgage giants Fannie Mae and Freddie Mac means for the federal budget. The blog, in my opinion, is a great resource and worth a regular read.

Here are some bullets from the update — note health care costs nearly top the list of the nation’s fiscal concerns:

CBO estimates that the deficit for 2008 will be $407 billion higher than last year’s $161 billion. As a share of the
economy, the deficit is projected to rise to 2.9 percent of GDP this
year, up from 1.2 percent of GDP in 2007.

Over the longer term, the fiscal outlook continues to depend mostly on
the future course of health care costs as well as on the effects of a
growing elderly population. CBO estimates that federal spending on
Medicare and Medicaid will grow to 6 percent of the GDP in 2018 and 12
percent of the GDP by 2050.

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