If no changes are made to current policies, the national debt will soar to a record high by 2035, according to a report released by the Congressional Budget Office Tuesday.
While spending – namely on entitlement programs including Social Security and Medicare – is projected to continue to climb at a rapid rate over the next 30 years, revenues are not expected to be able to keep up.
The nonpartisan scorekeeper said the lack of revenue comes from a combination of slowed economic growth and a number of tax cuts made permanent in December.
“In CBO’s projections, that debt rises to 86 percent of GDP in 2026 and to 141 percent in 2046—exceeding the historical peak of 106 percent that occurred just after World War II,” the report reads. “The prospect of such large debt poses substantial risks for the nation and presents policymakers with significant challenges.”
The CBO said the amount of projected debt would lead to a reduction in national saving and income and would increase the government’s interest costs – placing more stress on the federal budget and limiting lawmakers’ capacity to respond to unexpected situations that may need federal funding.
According to the findings, it also increases the likelihood of another fiscal crisis, depending on the economic climate, as investors will likely become “less willing to finance a government’s borrowing needs unless they are compensated with very high interest rates.”
According to the report, major changes would need to be made to correct the imbalance. The CBO said, depending on the target level for federal debt, if Congress wanted to the debt to equal 75 percent of the GDP in 2046, it would have to decrease non-interest spending by 1.7 percent of the GDP, roughly $330 billion in 2017.
“It points once again that we have an economy that isn’t growing and an administration that refuses to recognize the things that need to be done to allow the economy to grow,” House Budget Chairman Tom Price of Georgia told The Daily Caller News Foundation. “We need tax reform, regulatory reform and the repeal of Obamacare.”
Price added it should compel Congress to want to take action to implement pro-growth policies.
Democratic Rep. Richard Neal of Massachusetts had a different take on the situation than Price.
“I thought at the end of the ’90s we were on a glide path not only to fiscal rectitude, but we eliminated the deficit and were paying down the debt. And if you recall, Alan Greenspan said at the time we were paying down the debt too quickly – that seems to be forgotten around here,” he told TheDCNF. ” During the Bush presidency, we cut taxes by $2.3 trillion over 10 years coupled with two wars that were unpaid for and I think one of the things I find fascinating about it is our Republican friends only seem to be interested in deficits and debt when there are Democratic presidents.”
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