On Thursday, the Congressional Budget Office (CBO) released a 55-page report on the U.S. long-term budget outlook, and the picture isn’t pretty. The CBO revealed a number of troubling statistics about how U.S. federal spending is out of control.
“At 77 percent of gross domestic product (ADP) federal debt held by the public is now at its highest level since shortly after World War II,“ the report begins, and it only gets worse from there. If current spending trends continue over the next 30 years, the CBO projects the federal debt will hit 150 percent of GDP by 2047.
Not only is the U.S. on track to keep piling on new debt, the CBO expects the annual deficit to accelerate in coming years from 2.9 percent of GDP in 2017 to 9.8 percent of GDP by 2047. The CBO specifically mentions Social Security, Medicare and other healthcare programs and interest on outstanding federal debt as three of the biggest drivers to the increasing deficit.
Unfortunately, things only seem to be getting worse when it comes to federal spending. The CBO’s long-term debt projections for the year 2047 are up 5 percent prom previous projections in January 2017.
For Americans looking for a solution to the budget problems, the CBO says Congress needs to take extreme measures to cut spending.
“For example, if lawmakers wanted to reduce the amount of debt in 2047 to 40 percent of GDP, its average over the past 50 years, they might cut noninterest spending, increase revenues or take a combination of both approaches to make changes that equal 3.1 percent of GDP each year starting in 2018,” the CBO suggests.
Back in January, the CBO said President Donald Trump’s military and infrastructure spending initiatives, as well as his planned income and corporate tax cuts will contribute to a $10 trillion uptick in U.S. federal debt over the next decade.
Investors certainly don’t seem concerned about debt at this point. Since Election Day, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 10.4 percent.
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