America’s Debt Will be Twice the Size of the Economy by 2050
If you’re getting tired of unrelentingly bad news about the national debt—well, I have some terrible news.
Today the Congressional Budget Office (CBO) released a 30-year budget projection. By 2050, the number-crunching agency now says, the national debt will grow to 195 percent of gross domestic product (GDP). That’s 45 percentage points higher than the CBO was projecting last year. What it couldn’t foresee, of course, was the COVID-19 pandemic and the expensive federal response to it, which has pushed the national debt to nearly 100 percent of current GDP.
The national debt is expected to hit 107 percent of GDP—matching the record high set during World War II—by 2023:
Rising debt levels will “increase the risk of a fiscal crisis—that is, a situation in which investors lose confidence in the U.S. government’s ability to service and repay its debt, causing interest rates to increase abruptly, inflation to spiral upward, or other disruptions,” the CBO warns. “It would increase the likelihood of less abrupt, but still significant, negative effects, such as expectations of higher rates of inflation.”
A national debt nearly twice the size of the economy will put a significant damper on long-term economic growth. The CBO now projects average growth of just 1.6 percent annually over the next 30 years. That’s almost a full percentage point less than the 2.5 percent average growth rate during the past 30 years.
In short, Americans face the prospect of decades in which living standards increase at a slower rate. Businesses will likely have a harder time expanding, and the federal government will have an even harder time balancing its wildly off-kilter finances.
Although the coronavirus response has driven th
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