The omnibus budget deal and accompanying tax breaks for businesses and individuals that Congress agreed to in December will put a greater strain on the national debt, according to the Congressional Budget Office’s latest budget and economic outlook for 2016-2026.
Under the CBO’s forecast, the annual budget deficit will increase, as a share of the nation’s gross domestic product, to $544 billion — the first time it has done so since 2009, when the deficit peaked at $1.4 trillion.
Revenue, as a percentage of GDP, will remain above the 50-year average, but still will not be able to keep pace with spending, with most of the expenditure growth going to Social Security, Medicare, Medicaid, the Children’s Health Insurance Program and Obamacare subsidies.
Over the next 10 years, CBO projects that the federal government will add another $9.4 trillion in debt, and even this is a rather rosy scenario, as it assumes Congress will not ratchet spending up again, and the economy will not experience another recession.
During the first seven years of President Barack Obama’s tenure, the national debt has increased $8.3 trillion (78 percent), and stands at $19 trillion. That translates to nearly $71,000 per household, according to CNSNews.com, relying on U.S. Treasury and Census Bureau data.
Federal debt held by the public has increased from 39.3 percent of GDP in 2008 to 73.6 percent, an “already high level,” CBO notes. CBO expects that to continue to rise to 75.6 percent this year (”higher than it has been since the years immediately following World War II”) and on up to 86 percent by 2026.
As we have warned many times, federal borrowing for our sizable debt places an unfair burden on future generations, crowds out private savings and suppresses economic growth and innovation. This will only be exacerbated once the Federal Reserve allows interest rates to rise from their historic and artificially low levels, thereby substantially increasing our debt service costs.
Paying down debt may not be as sexy a presidential campaign issue as buying votes with a new spending program, but we need responsible adults who will tackle the issue, lest we wake up one day and discover that we are Greece.
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