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- Federal debt is projected to jump to post-World War II levels this year and reach unprecedented levels over the next three decades.
- Spending is expected to increase in part because of mandatory spending on Social Security and other major health care programs, and as payments on federal debt outpace government revenue, the CBO said.
- The federal deficit increased about 38% in the first seven months of the fiscal year, continuing to widen despite a solid economy.
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Federal debt is projected to jump to post-World War II levels this year and reach unprecedented levels over the next three decades, the Congressional Budget Office said Tuesday.
Under current laws, the CBO forecasts debt would reach 78% of gross domestic product by the end of 2019 and 144% of GDP by 2049. While those estimates are slightly lower than those made last year and remain highly uncertain, the nonpartisan office said they still present risks to the economy.
"The prospect of such high and rising debt poses substantial risks for the nation and presents policymakers with significant challenges," the CBO said its Long-Term Budget Outlook Report, noting that the US would see even larger increases in debt if lawmakers reversed course on plans to slash spending in 2020 and to let tax cuts expire in 2026.
Spending is expected to increase in part because of mandatory spending on Social Security and other major health care programs, the CBO said, and as payments on federal debt outpace government revenue.
The federal deficit increased about 38% in the first seven months of the fiscal year. That gap has continued to widen despite a solid economy, when lawmakers typically take steps to reduce it.
Republican lawmakers passed a $1.5 trillion tax cut package in 2017, vowing that the package would pay for itself. But a congressman who helped craft the legislation reversed on the claim that it would lift the economy enough that revenue from growth would make up for lost tax receipts.
"We will know in year 8, 9, or 10 what revenues it brought in to the government over time," Texas Rep. Kevin Brady said of the tax cuts, which are estimated to cost $1.9 trillion over the next decade. "So it’s way too early to tell."
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Source: Business Insider – gheeb@businessinsider.com (Gina Heeb)