CBO Estimates Debt Will Exceed GDP in 2021
Article from For Liberty by Norm Leahy.
The bad news keeps on coming regarding the federal debt. A new report from the Congressional Budget Office estimates that as soon as 2023, the debt will reach its largest level in history relative to GDP.
All that debt brings with it a host of potential problems:
High and rising federal debt makes the economy more vulnerable to rising interest rates and, depending on how that debt is financed, rising inflation. The growing debt burden also raises borrowing costs, slowing the growth of the economy and national income, and it increases the risk of a fiscal crisis or a gradual decline in the value of Treasury securities.
Fueling the debt’s rise is a bipartisan spending spree – financed with borrowed money. While interest rates remain historically low, that does not mean money is free:
With growing debt and higher interest rates, net spending for interest nearly quadruples in relation to the size of the economy over the long term, accounting for most of the growth in total deficits. Also increasing are spending for Social Security (mainly owing to the aging of the population) and for Medicare and the other major health care programs (because of rising health care costs per person and, to a lesser degree, the aging of the population).
Despite decades of promises to budget more careful, and spend more wisely, the political class has demonstrated it has no intention of doing either…in part because too many voters demand more spending.