CBO Long-Term Budget Outlook: Bad, Really Bad

0 Shares

The Congressional Budget Office (CBO) issued a majorly pessimistic revision to its long-term Federal budget outlook Wednesday, predicting that publicly-held Federal debt will rise to 100 percent of the National GDP within the next 30 years – instead of the already-alarming 73 percent of GDP it accounts for now.

Describing Congress’ annual capitulation to pressure to raise the Federal debt ceiling an “unsustainable” fiscal scheme, CBO director Douglas Elmendorf hinted that disaster lies ahead if the best that government can do is continue its tax-and-spend policy over the long term.

“The federal budget is on a course that cannot be sustained indefinitely,” Elmendorf said. “Because federal debt is already unusually high relative to GDP, further increases in debt could be especially harmful.”

The increasing ratio of debt service (that’s loan repayment for public debt) to GDP is on track to jump from 2 percent of GDP to 5 percent, meaning that the government will be spending more of tomorrow’s dollars to pay for tax-and-spend debt it’s incurring now. That, coupled with an enormous jump in Federal entitlement spending (an even 200 percent by 2038), threatens to commit the lion’s share of tomorrow’s economy to the economic equivalent of treading water.

The upshot is that the Federal debt is on track to reach – literally – 100 percent of GDP within the next 25 years.

“The policy responses to mitigate rising debt levels are all politically difficult,” writes Reason’s Peter Suderman. “Federal policymakers will have to cut spending, increase revenues, or some mix of the two. But it will be especially hard to raise revenues since they’re already on track to be higher as a percentage of GDP than is typical. Rapid changes might negatively shock the system. But letting debt continue to rise is dangerous too: ‘because federal debt is already unusually high relative to GDP,’ the report says, ‘further increases in debt could be especially harmful.’”

Congress is set to fight over another hike in the Federal debt ceiling next month, though an increase is all but inevitable if the government is to avoid defaulting, given its present rate of spending.

Read a pretty in-depth synopsis from the CBO here. Access the full report here.

Personal Liberty

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

Join the Discussion

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.

  • jdn

    Obama has already said there is no negotiating the debt ceiling , He is going on vacation soon and when he gets back if Congress has not provided for unlimited spending and tax increases he will play his oversized race card .

    • Larry

      He should’ve bagging groceries at Safeway

  • BHR

    This is no secret, America will collapse, the question is when. Many people will die. Obama has said over and over we must keep raising the budget, he has no idea of slowing our debt. He wants America rebuilt in the liberal image, total government control.

  • peter

    Guess who is going to pay for all this debt that is continually being incurred? My kids and your kids, that’s who. Why do we accept that these fraudsters just continue to kick our asses all the way to the bank and actually enjoy it? When we base our entire existence on debt, we are looking for trouble big time and that is not the way it is meant to be. We are born free and why should politicians reverse that at their own whim and fancy? Do not get yourself into debt folks and if you are in debt, get out of it a.s.a.p. and remember, you cannot get out of debt by incurring more debt, so don’t borrow from Paul to pay Peter. Time to find out who the crooks are? The bankster’s of course! They will bleed you, your Country and the entire world dry. They will sit with all the gold ( if they haven’t already bartered it away ) and you will have nothing. That won’t work, believe me! They can’t eat gold and the food will be gone anyway, so where will you be – no gold and no food? Sounds great!