A new Congressional Budget Office report offers a long-term road map of where U.S. debt is headed.
And it’s not to a good place – unless U.S. policymakers make some tough decisions and significantly alter federal spending and tax policies.
Total federal debt currently is about 74 percent of the gross domestic product, the economy’s annual output. That is higher than at any point in U.S. history except a brief period around World War II, and almost twice what it was at the end of 2008, according to the CBO.
The bipartisan agency of Congress estimates that although the total federal debt relative to GDP will decline slightly over the next few years, growing budget deficits after that will send it to more than 100 percent of GDP by 2039. But don’t expect Congress to get anywhere close to a balanced budget in the near future. The report predicts budget deficits of $7.6 trillion annually from 2015 to 2024.
The CBO calls the upward debt trend unsustainable. Consider the federal budget a driver who keeps the pedal to the metal up a steep hill without adding fuel or stopping to let the engine cool off. There’s going to be a breakdown. You just don’t know when.
If you think the CBO’s scenario is frightening, an analysis of its report by the Committee for a Responsible Federal Budget says if temporary spending and tax provisions are allowed to expire and deficits aren’t further increased, the public debt will rise to 147 percent of GDP by 2060 and 212 percent by 2085. If policymakers increase spending and reduce taxes, the debt could hit a mind-boggling 620 percent of GDP by 2085.
The CBO says putting the budget on a highway to sustainability requires reducing spending on the large benefit programs and letting revenues grow more than they would under current laws. That means lawmakers must curb spending in a smart way on defense and on the huge entitlement programs Medicare, Medicaid and Social Security. It also will require strategic tax increases.
The bottom line is, the U.S. needs to learn to live within its means – something it did until the 1960s, when it abandoned the consensus to balance the budget in good times.
Returning to a pay-your-bills mentality will take courage on the part of U.S. policymakers to read the signs and design a new road map, and an awakening of the American public to the need to divert from the impending fiscal calamity.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.