New CBO Budget Outlook Shows Dramatically Higher Long-Term Debt and Deficits
WASHINGTON, D.C. – Senate Budget Committee Chairman Mike Enzi (R-WY) today said the Congressional Budget Office’s (CBO) Budget and Economic Outlook for fiscal years 2020 through 2030 shows the country on an unsustainable fiscal path, with debt and deficits rising sharply. CBO’s extended projections show that the Bipartisan Budget Act of 2019 and legislation enacted last year that repealed the Cadillac tax will add massive amounts of debt over the long-term, which will dampen economic output and increase interest rates over time.
“CBO once again highlights that our mandatory spending programs, led by Social Security and Medicare, continue to grow faster than the revenue supporting them,” Chairman Enzi said. “It is crucial to address this imbalance and put the federal government on a long-term, sustainable fiscal path. This will allow us to preserve these programs for those who depend on them today, while safeguarding them for future generations tomorrow.”
CBO’s report showed that the long-term fiscal outlook has significantly worsened in the last seven months, due largely to legislation enacted in that time. Relative to projections in CBO’s June 2019 outlook, debt held by the public as a percentage of gross domestic product (GDP) three decades from now is projected to be 30 points higher. CBO’s report shows the nation’s debt-to-GDP ratio, which compares the nation’s debt to its total economic output for the year, will reach 180 percent by 2050. This is nearly 75 percentage points higher than the previous record set just after World War II.
“CBO’s new budget outlook shows the long-term consequences of Congress’s spendthrift ways,” said Chairman Enzi. “Instead of working together to confront our unsustainable fiscal course, the bipartisan consensus in Washington over the last year seems to be to double-down on reckless fiscal policies. It is long past time for lawmakers to get serious about our growing debt and deficits, which threaten economic growth and opportunity for our children and grandchildren.”
According to CBO:
- Federal debt held by the public is projected to grow from 81 percent of GDP in 2020 to 98 percent in 2030—its highest level since 1946, and twice the average over the past 50 years;
- High and rising federal deficits would reduce national saving and income, boost the government’s interest payments, limit policymakers’ ability to respond to unforeseen events, and increase the likelihood of a fiscal crisis;
- Federal outlays are projected to rise from $4.6 trillion in 2020 to $7.5 trillion in 2030, with growth in spending on Social Security, Medicare, and interest on the debt accounting for over two-thirds of the increase;
- Federal outlays are projected to grow from 21 percent of GDP in 2019 to 23.4 percent in 2030, at which point spending as a percent of GDP would be 3.0 percentage points higher than its 50-year average of 20.4 percent; and
- Medicare’s Hospital Insurance trust fund is projected to be exhausted by 2025 while the Highway trust fund will be exhausted by 2022.
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