CBO: Long-Term Budget Outlook Worse than Last Year

CBO: Long-Term Budget Outlook Worse than Last Year:
"In its 2016 Long-Term Budget Outlook, the non-partisan Congressional Budget Office (CBO) warns that federal debt is on an unsustainable path. 
Under current law, federal debt is now projected to reach 141 percent of gross domestic product (GDP) within 30 years. 
Unless policymakers act, CBO concludes that rising debt could jeopardize long-term economic growth, crowd out critical public investments, reduce policymakers’ flexibility to respond to unforeseen events, and raise the risk of a fiscal crisis.

The long-term budget outlook has deteriorated significantly since last year, when CBO projected debt would reach 111 percent of GDP in 30 years under current law. This deterioration stems largely from the enactment of legislation at the end of 2015 that made a number of temporary tax provisions permanent.

In the new report, CBO finds that:

• Federal debt is projected to climb to 141 percent of GDP under current law by 2046.
• Rising debt is a result of a structural imbalance between revenues and spending: under current law, spending growth, which is fueled primarily by the aging of the population and growing healthcare costs, significantly outpaces the projected growth in revenues.
• As the debt grows and interest rates rise, interest costs are projected to increase rapidly: by 2022, they could exceed what the federal government has historically spent on R&D, infrastructure, and education combined, and could exceed them by more than two times by 2046. In fact, over the next 10 years, the federal government will spend $5.8 trillion on interest.
• Rising debt will harm our economy and slow the growth of productivity and wages. On our current path, the annual income loss for a 4-person family would be $12,000 by 2046, on average.

...The National Debt Is on an Unsustainable Path

CBO estimates that federal debt, which is already at high levels, will climb significantly over the next 30 years. In CBO’s latest projections, debt is expected to climb from 75 percent of GDP in 2016 to 141 percent of GDP in 2046, based on current law.

Debt at those levels would be unprecedented. 
Over the past 50 years, debt has averaged only 39 percent of GDP and, as recently as 2007, it was as low as 35 percent of GDP. 
Since 1790, our debt has never exceeded 100 percent of GDP, except for a brief time during World War II when it peaked at 106 percent, after which the debt fell rapidly as a share of GDP..."