Deficit Decay

The FY 2016 budget deficit, which ends next month, will rise to $590 billion, or 3.2% of GDP, up from $438 billion or 2.5% of GDP in FY2015, the lowest level since 2007. The deficit is up because revenues will rise by just $26 billion while spending will increase by $178 billion due to Social Security, Medicare and Medicaid. More troubling, looking into the future, the deficit/GDP ratio gets worse.