CBO: Federal debt to double in 15 years

[Geee]

Washington Times:

The federal government is staring at a disastrous fiscal picture with debt approaching 200 percent of GDP within two decades if Congress doesn’t change course on spending and taxes, according to the latest analysis by the Congressional Budget Office released Tuesday.

CBO said it’s the worst picture since a brief period during World War II when spending ballooned to fund the military campaign.

“In the past few years, the federal government has been recording the largest budget deficits since 1945, both in dollar terms and as a share of the economy. Consequently, the amount of federal debt held by the public has surged,” CBO said in a long-term budget outlook that paints a shockingly dark picture of government finances.

CBO’s analysts said the downturn and Congress’s response to it have been devastating for the government. Federal debt as a percentage of Gross Domestic Product — a standard measure of a government’s debt burden — stood at 40 percent at the end of 2008. But it will top 70 percent by the end of this year, and is only headed higher unless Congress changes. It could double by the middle of the next decade and will have topped 200 percent of GDP — twice the size of the projected U.S. economy — by 2037.

At that level, fiscal catastrophes are more likely, and the government’s ability to respond becomes far more constrained.

Ironically CBO said the deep deficits and debt don’t have to happen. If Congress would step out of the way and allow current law — including ever-deeper spending cuts and potentially devastating tax increases — to go into effect, debt would begin to shrink almost immediately as a percentage of the economy, as measured by Gross Domestic Product.