The US is on target to eclipse previous economic forecasts and add a staggering $19 trillion to the national debt in the next 10 years, according to the nation’s budget scorekeeper.
In a report released on Wednesday, the Congressional Budget Office warned that one way or another, through tax hikes or spending cuts, the country’s fiscal course needs to be corrected.
“Over the long term, our projections suggest that changes in fiscal policy must be made to address the rising costs of interest and mitigate other adverse consequences of high and rising debt,” CBO Director Phillip Swagel wrote in a letter released along with the report.
The CBO projects that within a decade, the national debt in relation to the size of the economy will rise to unprecedented levels. Debt held by the public is projected to reach 118% of GDP by 2033 — the highest level ever recorded – according to the CBO.
The CBO’s new projections show $3 trillion more will be added to the national debt by 2033 than was previously expected.
Congressional Budget Office Director Phillip Swagel speaks during a news briefing on the release of new economic reports on Feb. 15, 2023 in Washington, DC. Getty Images
The report estimates a $1.4 trillion budget gap in 2023 between government spending and tax revenues.
Over the next decade, the CBO predicts that deficits will average $2 trillion annually, with tax revenues continuing to lag behind the rising costs of entitlement programs, such as Social Security and Medicare.
On top that, the nonpartisan budget group also predicts that the US economy will barely grow in 2023, after taking account of inflation, and that joblessness will increase, with the unemployment rate rising above 5% for the first time since 2021.
The CBO projects that within a decade the national debt will rise to unprecedented levels. Getty Images for Peter G. Peterson Foundation
The CBO ascribes the expected growth slowdown to the Federal Reserve’s efforts to rein in inflation by raising interest rates.
The new forecast could heat up the debate between Republicans on Capitol Hill and President Biden over taxes, spending, and raising the country’s debt ceiling.
Several GOP lawmakers, including House Speaker Kevin McCarthy (R-Calif.), have indicated that they will not vote to raise the debt ceiling – which limits the amount of money the government can borrow to fulfill its obligations — unless the 80-year-old president agrees to spending cuts.
CBO Director Phillip Swagel wrote in a letter suggesting that changes in fiscal policy must be made to address the rising costs of interest.Getty Images
“The warning is that the fiscal trajectory is unsustainable,” Swagel told reporters Wednesday about the CBO’s new projections, adding that it will be virtually impossible to change the country’s fiscal trajectory, and balance the budget in 10 years, without changes to Social Security and Medicare.
“It’s mathematically possible,” Swagel said, but added that “it’s very, very challenging.”