(Central Square) – The Congressional Budget Office released a bleak outlook for the federal government Wednesday, including new projections for debt levels to reach their highest level in five years.
“The debt held by the people due to large budget deficits will reach a record high level (measured as a percentage of GDP) in 2029, and will continue to increase thereafter, reaching 166% of GDP in 2054, and will continue to increase thereafter. ” according to the CBO report. “Increasing debt would slow economic growth, drive up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook. It could also cause lawmakers to feel further constrained in their policy choices. There’s also gender.”
CBO also predicted that the Social Security Old Age and Survivors Insurance Trust Fund would be depleted in 2033, the Medicare Hospital Insurance Trust Fund in 2035, and the Highway Trust Fund in 2028.
Maya McGuineas, chairwoman of the Committee for a Responsible Federal Budget, said the new report should serve as a wake-up call to Congress.
“This is yet another reminder that politicians are putting their political priorities ahead of the long-term health of the country,” she said. “You can't look at these alarming numbers without knowing that we need to make changes. Yet we won't raise taxes, we won't fix Social Security, and I won't do it.” I have a member of Congress who is committed to doing things. I'm not going to pay for everything I want to do. And we're going to continue down this dangerous path.”
McGuineas said neither President Joe Biden nor former President Donald Trump have talked about solutions in the campaign for the 2024 presidential election.
“So far, the presidential race has shown no hope. Candidates need to be asked how they will improve Social Security, improve Medicare, and bring the debt back to manageable levels. “There is,” she said. “Voters shouldn't be satisfied without concrete answers.”
“Rising interest rates and rising debt will more than double interest costs relative to GDP from 2024 to 2054,” the CBO report said.
“These costs will reach 6.3% of GDP in 2054, increasing each year from the average of 2.1% of GDP over the past 50 years,” the report said. “Interest rate increases account for about two-thirds of the expected increase in net interest costs from 2024 to 2054, with primary deficits accounting for the remainder.”
Mr McGinius said the biggest concern was rising interest costs.
“The scariest part of our dire fiscal outlook is rising interest costs. Those costs have already doubled as a share of the economy since 2015, and the CBO expects interest rates to rise this year by more than defense spending and Medicare.” “I think it will be expensive,” he said. “Interest costs, which became the largest line item in the entire federal budget in 2051, will double again by 2053. This year, we will spend $870 billion on interest, and this is going to go to our children. It's more than the entire federal budget we've spent on it, and that number will double.'' It's only going to grow from here. ”
Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said the long-term outlook is “dangerous.”
“A new CBO report shows that America’s debt, which pays more than $75 trillion in interest alone, will grow by more than $100 trillion over the next 30 years. “This is uncharted territory for the world's largest economy.” “Looking ahead to 2025, leaders elected this fall will face a series of important fiscal decisions, including the debt ceiling and the expiration of portions of the 2017 tax cuts. Campaign season As we enter the midst of a crisis, the CBO report provides positive evidence that our debt problem is serious and that fiscal solutions should be a key part of the national conversation. It is.”
