JUL 27, 2022 BUDGETS & PROJECTIONS
The Congressional Budget Office (CBO) released its Long-Term Budget Outlook today, which shows debt rising to 185 percent of GDP by 2052 under CBO’s current baseline. Also today, the Federal Reserve announced a 75-basis-point increase in interest rates and signaled further interest rate hikes in the future to help keep inflation under control.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Inflation is surging, interest rates are rising, and debt is growing unsustainably. It is well past time for policymakers to work together to get our fiscal house in order.
Even under CBO’s outdated economic assumptions and current law policy assumptions, debt will hit a new record in 2031 and rise to an unprecedented 185 percent of GDP in 30 years. We’re entering uncharted territory.
Rising interest rates are fanning the flames of this already dangerous situation.
Assuming relatively low rates, interest will hit a record 3.3 percent of GDP by 2032 and more than double that record by 2052. By 2049, interest will be the single largest federal government expenditure, and in combination with health and retirement spending it will make up nearly three-quarters of the budget by 2052.
If interest rates follow CBO’s higher interest rate path, debt would reach 235 percent of GDP. And if policy followed CBO’s costly alternative scenario, debt would increase to 262 percent of GDP by 2052.
All this is a reminder to those who argued we should amp up our borrowing in years past because rates would always remain low that this was a dangerous bet with real consequences.
Today’s outlook is all the more reason we need a deficit-reducing reconciliation package focused on generating budgetary savings and controlling inflation.
We need to take action today, before debt and interest costs spiral out of control.
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QUINNSCOMMENTARY 
I suppose you could say that voters are naive to vote only for their party. I suspect it is because they are steeped in their view of what their party stands for. They don’t think through that sometimes their party has shifted in not good ways.
It isn’t just self concerned economics that drives the vote.
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Vote for Biden and the D’s so that they can pass legislation like the Inflation Reduction Act of 2022, the Chips Act of 2022 and the American Rescue Plan Act of 2021 and take administrative steps like delaying student loan repayments. In July 2052, I would have been 100 years old – I’ll likely not be around, so good luck with managing the debt and deficit in 2052.
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Boy, what a difference a month makes between CBO reports. Can’t wait until next month when they factor in the latest interest rate increases.
Some people mistakenly believe that the Federal Reserve will not raise increase rates as high as they did in the 1980’s because we will not be able to pay our debt. The longer the Feds wait, the worse it will be, that is just for paying interest on our debt. Congress has to stop spending money it doesn’t have. The President may forgive student loan debt but nobody is going to forgive our national debt. Not foreign nations or US citizens holding onto Savings Bonds or have bond funds in their 401Ks. Sometimes people think that our national debt isn’t their problem.
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That is: the Federal Reserve will not raise increase rates as high.
I wish this blog allowed editing.
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