Shortly after the Concord Coalition’s Sara Imhof outlined problems associated with federal debt during a presentation for the John Locke Foundation’s Shaftesbury Society, the Washington Examiner‘s Joseph Lawler filed a news report on the topic.
“The long-term outlook for the federal budget has worsened dramatically over the past several years, in the wake of the 2007-2009 recession and slow recovery,” the Congressional Budget Office reported in its long-term budget outlook for 2015 released Tuesday.
The Budget Office, a nonpartisan in-house think tank for Congress, projected that the federal debt is set to rise from 74 percent of economic output today to 103 percent by 2040, driven by spending on government healthcare and retirement programs and interest payments on the debt.
The projection issued Tuesday, which is subject to significant uncertainty, is a slight improvement from last year, when the budget office estimated that debt would hit 106 percent by 2039. The outlook has gotten brighter, if only trivially, because financial markets now expect lower interest rates in the future, which will lower the cost of servicing the debt for the Treasury.
The budget office warned that debt would still be growing in 2040. It also could be nearly twice as large by 2040 as in the baseline estimate if a more realistic guess about how Congress will act in the years ahead and the economic feedback from higher debt placing a drag on economic growth are taken into account.
