Home > Federal Bills, Federal Power > CBO releases data showing record debt as a percentage of GDP is approaching

CBO releases data showing record debt as a percentage of GDP is approaching

September 23, 2013

Last week the Congressional Budget Office (CBO) released the 2013 Long-Term Budget Outlook report. The most noteworthy finding from this report is that “Federal debt held by the public is now about 73 percent of the economy’s annual output, or gross domestic product (GDP).” Only once has the United States had debt at such high levels, and that was during World War II when all resources were being redirected to the military-industrial complex. It is also worth noting the current level is more than double the debt level of 2007. These levels simply cannot be sustained for the country to stay fiscally sound. If these projects hold it will make the previous records set during WWI look like a little ‘blip’.

Below is the chart from the CBO showing federal debt as a percentage of GDP projection for the next 25 years. Next year (FY2014) there will be a slight increase, followed by a couple of years of slight decreases. The federal debt held by public as a percentage of GDP will reach 100% by 2038. Such projections make the debt ceiling and continuing resolution debates seem pretty silly. Congress has to start working on true downsizing of government. Only trimming waste and duplicity from the Federal government are likely to reverse this trend.

CBOdebt

Image Source: CBO

Part of the reason for this growth in debt is because the Obama years are continuing the Bush administrations standard of higher spending compared to revenues. The chart below shows this trend. The good news is that spending for 2013 has dropped. However from this point on there is a slight rise in spending each future year of the CBO projection. The chart below shows about a 6% percentage of GDP spending/revenue deficit by 2038. This deficit will allow the federal debt as a percentage of GDP will reach 100% by 2038.

Image Source: CBO

Image Source: CBO

Now for the good news: This projection is based upon currently passed laws. It is not too late to change course! I would recommend reading the report summary or the whole report (PDF). It shows how healthcare and social security spending will completely overwhelm federal spending in the next 25 years. I would also recommend everyone pressure our DC legislators into passing a true debt-reducing budget. DC legislators playing their debt-ceiling and budget continuing resolution game does nothing but act as politicized procrastination. Politicians on both sides have got to start making these tough decisions before it is too late.

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