CBO expects the national debt to double in the next 30 years
through: JOSH BOAK, Associated Press
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The Congressional Budget Office on Thursday estimated that persistent budget deficits will cause the national debt to double over the next 30 years.
After the 2008 financial crisis and pandemic, the government relied heavily on borrowing and low interest rates to help an ailing economy. However, as the economy is expected to recover, the CBO predicts that interest rates will rise and spending on programs like Social Security and Medicare will increase.
The estimates don’t include President Joe Biden’s proposed $1.9 trillion coronavirus relief package, which would further widen the deficit on hopes of faster growth and hiring.
Without Biden’s bailout plan, the annual budget deficit would be 10.3% of this year’s gross domestic product, a measure of the overall size of the US economy. The annual deficit as a percentage of GDP would decrease over the next decade and then increase over the following decades, reaching 13.3% in 2051.
All of this results in the US government carrying a higher debt burden. The CBO said publicly held debt would be equivalent to 102% of this year’s GDP. It is estimated that accumulated debt will grow to 202% of GDP by 2051.
Still, there was positive news as the CBO forecast strong economic growth that will lead to higher payroll tax revenues. It estimates that Social Security will exhaust its combined trust funds in calendar year 2032, a year later than forecast in September.