On Thursday, the Congressional Budget Office released a report projecting that federal budget deficits will more than triple over the next thirty years. That will lead to record levels of debt for the U.S. federal government.
“At 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II,” the document noted. “If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047.”
“Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy,” it continued. “The amount of debt that is projected under the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis.”
According to the CBO, much of the increased spending will come from Social Security and Medicare as more baby boomers qualify for benefits, head into retirement, and face rising healthcare costs. Interest on the debt is also expected to rise as the government potentially hikes the Federal Reserve rate and borrows more money to fulfill its financial obligations.
These alarming findings come as Congress faces several financial items on their agenda.
Current funding for the government is expected to run out on April 28, leading to concerns that if legislation isn’t passed to fix the problem, there might be a partial government shutdown. As the WEEKLY STANDARD previously reported, the debt ceiling came back into play when the Treasury Department sent a warning letter on March 8. And Republicans are currently pursuing tax reform after their efforts to replace Obamacare broke down last week.
President Donald Trump, for his part, already released a proposed budget on March 16 that would cut $15.1 billion in spending. Republican Bob Corker said, “Today’s report further underscores the need for Congress and the administration to address our country’s dire fiscal imbalance.”
Democrats, however, think that the CBO’s estimates ultimately help their side, because they show the irresponsibility of pursuing large tax cuts.
House minority leader Nancy Pelosi said in a Thursday statement: “The CBO’s long-term budget shows America cannot afford a Republican tax plan that hands multi-billion dollar tax breaks to the richest on the backs of the middle class. There is room for bipartisan tax reform, but it must be fiscally-responsible and it must not come at the expense of hard-working Americans.”
Congress is not known for taking prudent action anyway—particularly if the consequences won’t be fully realized until 30 years out.
