The federal debt will soar to levels unseen in the nation’s history over the next 30 years, consuming an ever-growing and unsustainable proportion of the nation’s income, the director of the Congressional Budget Office said
on Monday.in the wake of the pandemic and the ensuing economic recess, forecasting that the debt will rise to 98 percent of GDP by the end of this year and reach 195 percent of GDP by 2050. Such levels would demolish the previous record of 106 percent just after World War II.Debt made up 79 percent of GDP before the pandemic in 2019. Before the previous recession in 2007, it was 35 percent., the ranking Republican on the House Budget Committee, in a statement.
CBO Director Phillip Swagel noted, however, that a fiscal crisis isn’t immediately at hand while the Federal Reserve works to keep interest rates so low. The debt is still manageable and Congress has time to address it — although action may soon be needed with major Social Security, Medicare and highway trust funds set to dry up within the next 11 years, Swagel said.
The report comes as the federal deficit ballooned to $3.3 trillion this year, primarily due to the massive response mounted by the government to combat the pandemic. Congressional leaders are at an impasse over another package to deliver more coronavirus cash,At some point, lawmakers must grapple with the task of funding the government in fiscal 2021. Beyond that, Congress has no budget caps to set overall funding levels or constrain federal discretionary spending in fiscal 2022.
CBO projected that mandatory spending will increase from nearly 13 percent of GDP last year to 17.5 percent in 2050, with rising costs for health programs and Social Security exacerbated by an aging population. Interest on the debt is also expected to quadruple as a percentage of GDP over the next three decades, increasing from 1.8 percent of GDP in 2019 to 8.1 percent of GDP in 2050. Federal spending on interest payments is expected to exceed all discretionary spending by 2043.
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