Debt and Deficits

Federal Debt Still Completely Out of Control

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As the world seemingly goes to hell via armed conflict overseas and at home, here's a quick reminder from the Congressional Budget Office (CBO) that the money for all of that ammunition—whether the explicitly lethal stuff or less-lethal rubber bullets—has to run out eventually. Federal spending continues to outstrip revenue for as far into the future as the CBO can see. From the most recent long-term budget outlook:

If current laws remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits would push debt back to and above its current high level. Twenty-five years from now, in 2039, federal debt held by the public would exceed 100 percent of GDP, CBO projects. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.

Debt

Of course, that money running out doesn't actually fix anything. Not in a planned way. More than likely, it just generates a whole new world of hurt.

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government's willingness or ability to pay its debt obligations, which would require the government to pay much higher interest costs to borrow money. Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country.