The United States in 2020 will owe to creditors almost as much as it produces as an economy, and interest on the national debt will grow to almost $1 trillion, according to an analysis of President Obama’s budget released Friday afternoon by the Congressional Budget Office.
The U.S. also, under the president’s budget, would spend an average of about 25 percent of what it produces each year. The U.S., until the last few years of former President George W. Bush’s time in office, has traditionally spent about 20 percent of its gross domestic product.
The national debt will grow from its current level of about $7.5 trillion, which is 53 percent of GDP, to $20.3 trillion, which is 90 percent of GDP, by 2020, the CBO numbers said, adding that the interest the U.S. will have to pay on that debt will “more than quadruple” in that time.
Republican Rep. Paul Ryan, the ranking member on the House Budget Committee, estimated that the annual interest paid on top of U.S. debt payments would grow from $209 billion this year to $916 billion in 2020.
Ryan said the CBO report showed, “the president’s budget will continue to lead our nation into a fiscal catastrophe.”
He and other Republicans pointed out that the CBO report estimated that deficits over the next 10 years will be $1.2 trillion higher than the president’s budget estimated in February, in part because the CBO predicts lower revenues than the White House does.
But the CBO projected deficit is closer to $10 trillion for the next decade, compared to $9 trillion in the president’s outlook. The difference results from different assumptions in CBO projections versus White House projections, rather than problems with the math of one or the other.
Republicans said this extra $1.2 trillion in deficits over the next decade “wipe out” any savings that might arise from the president’s health-care reform plan. Obama has said that his proposal would reduce the deficit by about $1.1 trillion over the next 20 years.
“Even if the president’s projected deficit savings ($1.1 trillion) all come to pass over the next 20 years (and he fully implements the half-trillion in Medicare cuts and half-trillion in new taxes), it won’t even make up for the additional $1.2 that the CBO found that the president missed in his budget projections in just the next 10 years,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, Kentucky Republican, in an e-mail to reporters.
Ken Baer, a spokesman for Obama budget director Peter Orszag, said the CBO’s numbers showing rising deficits increased the need for health-care reform that saves money.
“If anything what that shows is the importance of passing fiscally responsible health-care reform … that not only is paid for entirely in the first 10 years but also in the second 10 years will reduce the deficit,” Baer said.
“There’s a lot of uncertainty about budget projections … but they all show we’re on an unsustainable fiscal path and it’s critical that we do one of the most important things that would help our fiscal situation, which is bring down the skyrocketing costs of health care,” he said.