U.S. budget deficits over the next decade will be $286 billion less than previously estimated, the Congressional Budget Office said on Monday, attributing much of the decline to lower estimates of subsidy costs under President Barack Obama's health insurance reform law.
The non-partisan CBO, in revisions to its annual budget estimates, said the fiscal 2014 deficit would fall to $492 billion from $514 billion estimated in February. The forecasts assume no changes to current tax and spending laws.
The agency attributed the current year's decline to technical revisions to the way it estimates spending on discretionary programs. But from fiscal 2015 onwards, it estimates a $186 billion decline in outlays for health insurance subsidies under the Affordable Care Act, commonly known as Obamacare.
This reflects a lower projection of premiums charged for health care plans offered through government-run exchanges, CBO said, based on an updated analysis of plans now being offered. Overall, the budget referee agency now projects cumulative 10-year deficits at $7.62 trillion compared to its previous forecast of $7.9 trillion.
In addition to the lower health insurance subsidy costs, CBO also estimated a $98 billion 10-year reduction in Medicare outlays due to lower spending on prescription drugs and hospital insurance. Medicaid, the health care program for the poor, would see a $29 billion reduction, CBO said.
CBO lowered its 10-year cost estimate for the federal food stamps program by $24 billion, based on new data from the Department of Agriculture on monthly average benefits. But the CBO left intact its previous economic projections, which envision rising deficits after 2015 as more of the massive "baby boom" generation retires or drops out of the workforce.
Deficits will reach a low point of $469 billion, or 2.6 percent of U.S. economic output, in 2015, then gradually start to rise, topping $1 trillion again in 2023 and 2024. U.S. deficits exceeded that dollar amount during each of the first four years of Obama's administration as the economy recovered slowly from the worst recession since the 1930s, falling to $680 billion in fiscal 2013.