CBO Expects Significant Rise in Public Debt Burden, Deficit
President Biden delivered remarks in the Rose Garden of the White House during his first in-person appearance since contracting Covid-19.
Photo:
michael reynolds/Shutterstock
The U.S. public debt burden and deficit are projected to rise significantly over the long term but less than previously forecast, the Congressional Budget Office said Wednesday.
While the nation’s fiscal picture has been improving this year because of a sharp decline in the deficit as federal Covid-19 spending wanes and tax revenues increase, the nonpartisan agency’s latest projections show the U.S. over the next 30 years will continue to face an increasing budget shortfall and higher debt levels.
The CBO estimates that federal debt held by the public as a share of the economy will rise to 107% in 2031. That level that would surpass its historical high, from roughly 98% in fiscal year 2022, which began last October. Debt as a share of gross domestic product will then rise to 185% by 2052, CBO estimates.
The agency projects the federal deficit as a share of the economy will rise from 3.9% in 2022 and reach 11.1% over the next 30 years, driven mostly by increased spending on net interest costs. Outlays on net interest are expected to quadruple by 2052 as persistently large deficits drive increases in federal debt and interest rates rise, CBO said.
Still, the latest projections show debt and deficits rising to a lower level than the CBO forecast in March 2021. The agency at that time saw debt held by the public and deficits increasing to 202% and 13.3% of GDP, respectively, over 30 years.
The U.S. deficit has played a key role in a debate in Washington over President Biden’s economic agenda, which has hit roadblocks in Congress amid opposition from Sen. Joe Manchin (D., W.Va.) and Republicans. Mr. Biden and administration officials have argued that the falling deficit demonstrates that their policies have helped bolster the U.S. economy and the nation’s fiscal health. Mr. Manchin and Republicans have raised concerns about additional large-scale government spending, particularly at a time of elevated inflation. The CBO’s projections are also being closely followed by lawmakers ahead of midterm elections that will decide which party controls Congress.
The CBO’s estimates released Wednesday build on 10-year forecasts the agency released in May, which project economic growth and inflation will cool later this year.
Write to Amara Omeokwe at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
President Biden delivered remarks in the Rose Garden of the White House during his first in-person appearance since contracting Covid-19.
Photo:
michael reynolds/Shutterstock
The U.S. public debt burden and deficit are projected to rise significantly over the long term but less than previously forecast, the Congressional Budget Office said Wednesday.
While the nation’s fiscal picture has been improving this year because of a sharp decline in the deficit as federal Covid-19 spending wanes and tax revenues increase, the nonpartisan agency’s latest projections show the U.S. over the next 30 years will continue to face an increasing budget shortfall and higher debt levels.
The CBO estimates that federal debt held by the public as a share of the economy will rise to 107% in 2031. That level that would surpass its historical high, from roughly 98% in fiscal year 2022, which began last October. Debt as a share of gross domestic product will then rise to 185% by 2052, CBO estimates.
The agency projects the federal deficit as a share of the economy will rise from 3.9% in 2022 and reach 11.1% over the next 30 years, driven mostly by increased spending on net interest costs. Outlays on net interest are expected to quadruple by 2052 as persistently large deficits drive increases in federal debt and interest rates rise, CBO said.
Still, the latest projections show debt and deficits rising to a lower level than the CBO forecast in March 2021. The agency at that time saw debt held by the public and deficits increasing to 202% and 13.3% of GDP, respectively, over 30 years.
The U.S. deficit has played a key role in a debate in Washington over President Biden’s economic agenda, which has hit roadblocks in Congress amid opposition from Sen. Joe Manchin (D., W.Va.) and Republicans. Mr. Biden and administration officials have argued that the falling deficit demonstrates that their policies have helped bolster the U.S. economy and the nation’s fiscal health. Mr. Manchin and Republicans have raised concerns about additional large-scale government spending, particularly at a time of elevated inflation. The CBO’s projections are also being closely followed by lawmakers ahead of midterm elections that will decide which party controls Congress.
The CBO’s estimates released Wednesday build on 10-year forecasts the agency released in May, which project economic growth and inflation will cool later this year.
Write to Amara Omeokwe at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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