CBO Sees U.S. Federal Debt Almost Double Economy’s Size in 2050
CBO Sees U.S. Federal Debt Almost Double Economy’s Size in 2050
(Bloomberg) -- The U.S. government’s debt will swell over the next 30 years to almost double the size of the economy, raising the risk of a fiscal crisis or a drop in the value of Treasuries, the Congressional Budget Office said Monday.
The nonpartisan agency, in its long-term budget outlook, projected debt will reach 195% of gross domestic product in 2050, up from 98% this year and 79% in 2019. That compares with the prior 2050 forecast of 180% from January, before the coronavirus pandemic struck the nation and spurred Congress to pass about $3 trillion of stimulus.
While low interest rates “indicate that the debt is manageable for now and that fiscal policy could be used to address national priorities,” the budget path is unsustainable over the coming decades and borrowing costs will eventually become an issue, CBO Director Phillip Swagel said in a statement.
Some scholars are increasingly taking issue with such views in recent years. The school of Modern Monetary Theory argues that countries like the U.S., which borrow in their own currency, don’t need to worry about boosting debt to support growth, so long as inflation remains under control.
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