Congress should be alarmed by the CBO’s new debt projections. Instead, it’s aiming for bigger budget deficits.
Amid all the blaring headlines coming out of Washington, here’s a piece of news that is getting far too little attention: The US is on course for fiscal breakdown. That’s the unambiguous message from the Congressional Budget Office’s newly updated long-term projections. Unless Congress changes course, there’ll be a reckoning, and it will be grim.
As the CBO details, deficit spending is more out of control than ever. Both parties share the blame, as do both ends of Pennsylvania Avenue. And all should remember that investors’ appetite for US government debt isn’t limitless.
The federal government is currently spending roughly $7 trillion and collecting only $5 trillion in taxes annually. The resulting deficit is a little over 6% of gross domestic product, a disturbingly high number for an economy around full employment.
The CBO expects public borrowing to remain at this elevated level or higher for decades. Assuming no recessions, public debt will rise to 100% of GDP this year and 118% by 2035 — and it just keeps rising from there.