In a study done last year, the nonpartisan Congressional Budget Office disclosed that the total amount of federal debt held by the public equaled 74% of the gross domestic product. While it represents one of the highest levels in history, the CBO projects that, if the current laws remain unchanged, the publicly-held federal debt would exceed 100% of GDP by 2039. The CBO says “Beyond the next 25 years, the pressures caused by rising budget deficits and debt would become even greater unless laws governing taxes and spending were changed.”
While the CBO projects the federal debt held by the public will decline slightly over the next few years, the picture gets darker after that. The CBO reports the rising debt levels and growing budget deficits result from increased spending for Social Security and health care entitlements. They say, “Barring changes to current law, that additional spending would contribute to larger budget deficits toward the end of the 10-year period that runs from 2015 to 2024, causing federal debt, which is already quite large relative to the size of the economy, to swell even more.”
To curb this path of unsustainability, the CBO suggests significant changes to tax and spending policies, such as “reducing spending for large benefit programs below the projected levels, letting revenues rise more than they would under current law, or adopting some combination of those approaches”.
Senator Rob Portman, R-Ohio said “when it comes to the real fiscal problems we face, when it comes to the mandatory spending that is driving our country towards bankruptcy and threatening to undermine programs like Social Security, Medicare, and Medicaid – on which millions of Americans rely – we have done nothing. Today’s report is another reminder that we cannot continue to kick the can down the road. We need reform, and we need it now.”
House Representative Steny H. Hoyer, D-Md. tells us that the CBO study “ought to be a stark reminder that Congress must work together to promote fiscal sustainability over the long term. If we fail to do so” he says “the result will be fewer opportunities for American families.”