CBO Lays out Tough Choices for Cutting Federal Debt
The federal government’s binge spending has had real consequences for the year deficit and overall national debt. According to the Congressional Budget Office, coronavirus relief deepened the fiscal mess. But spending was already out of control before anyone ever heard of the virus:
…the projected deficit was large by historical standards ($1.1 trillion, or 4.9 percent of GDP) even before the disruption caused by the pandemic.
Left unchecked, the debt will tower over the economy:
CBO projects that if current laws governing taxes and spending generally remained unchanged, federal debt held by the public would first exceed 100 percent of gross domestic product (GDP) in 2021 and would reach 107 percent of GDP, its highest level in the nation’s history, by 2023. Debt would continue to increase in most years thereafter, reaching 195 percent of GDP by 2050.
Obvious methods for correcting this problem boil down to raising taxes or cutting spending – both of which are political poison to the respective major political parties. The CBO offers several spending reduction/reform options I both mandatory and discretionary spending.
There are no painless options – no easy way out of the mess decades of fiscal imprudence and bipartisan dodging have created.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons