The subject of debt – how much and how tolerable – slipped into the shadows for a time. But yesterday, it reappeared. As Rebecca Shabad of the Hill reports:
U.S. debt will hit 101 percent of the nation’s economic output by 2039, the Congressional Budget Office (CBO) said in a report released Tuesday.
The report:
… highlights how quickly budget deficits are accumulating. In 25 years, debt as a share of gross domestic product (GDP) is expected to balloon to levels only previously seen during World War II.
And warns:
“The harmful effects that such large debt would have on the economy would worsen the budget outlook. At some point, investors would begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money.”
We knew this – in the broad outlines, anyway, if not the precise numbers – but it is probably good to be reminded. Especially at a time when presidential candidates are promising things that would make the problem worse. There is, for instance, Bernie Sanders who wants to spend more on all manner of things. To include Social Security. The CBO, as Andrew Briggs of Forbes writes, also took a look at that program and returned with a finding that:
… Social Security’s long-term funding gap has more than quadrupled since 2008.
As is well known, a fix is possible. But it would take:
… an immediate and permanent 4.4 percentage point increase in the Social Security payroll tax, from 12.4 to 16.8 percent of wages, would be enough to keep the program’s trust fund solvent over the next 75 years.
Or:
… we could immediately cut benefits across the board by about 23 percent.
And good luck with that.
