The Wall Street Journal: U.S. National Debt Will Rise to 98% of GDP by 2030, CBO Projects
Article by Richard Rubin in The Wall Street Journal
The national debt and sustained federal budget deficits will hit the highest levels since World War II over the next decade, the Congressional Budget Office projected on Tuesday, following multiple rounds of tax cuts and continued increases in federal spending.
The government will spend $1 trillion more than it collects in 2020 and deficits will reach or exceed that threshold every year for the foreseeable future. As a share of gross domestic product, the deficit will be at least 4.3% every year through 2030. That would be the longest stretch of budget deficits exceeding 4% of GDP over the past century, according to the CBO, a nonpartisan arm of Congress.
Debt held by the public is projected to be 81% of GDP this year and to reach 98% by 2030. That stems from the combination of tax cuts and projected increases in spending—particularly on safety-net programs such as Medicare and Social Security as the population ages and health-care costs rise.
Budget deficits were larger after the 2008-09 financial crisis, but what makes the current period unusual is that the gap between taxes and spending has remained high even as the economy extends a record-long expansion.
“Not since World War II has the country seen deficits during times of low unemployment that are as large as those that we project,” said CBO Director Phillip Swagel, who warned that the budget is on an unsustainable path.
Tuesday’s deficit forecasts may end up being too low. The CBO’s projections assume there are no changes to current spending and tax law. Deficits and debt would be larger if Congress extends individual tax cuts beyond their scheduled expiration at the end of 2025.
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