CBO says U.S. debt to exceed GDP in two decades

The United States national debt is enormous. Not only do taxpayers face a national debt that is more than $17 trillion, they also face more than $100 trillion in unfunded liabilities and expenditures. If all of this is factored into the equation then taxpayers are on the hook for approximately $200 trillion over the next few decades.

To make matters worse, the Congressional Budget Office (CBO) published a new report Tuesday that confirmed that the U.S. debt will eclipse the gross domestic product and reach 106 percent of total economic output within 25 years. This also represents a slight seven percent increase from a similar report released last fall.

According to the CBO, the calculations were modified because of changes in its long-term budget forecast that is based on present day tax and spending laws. Its economic growth projections were reduced because of lower interest rate and healthcare cost estimates.

Essentially, the financial changes haven’t altered the opinions of the non-partisan government agency that avers federal deficits are unsustainable and could instigate a serious financial catastrophe in the years to come. A significant percentage of the debt and deficits over the next two decades can be attributed to the aging population, says the CBO.

“Economic growth will be slower in the future than it has been in the past, CBO projects, largely because of a slowdown in the growth of the labor force resulting from the retirement of the baby boom generation, declining birth rates and the leveling-off of increases in women’s participation in the labor market,” CBO stated in the report.

There are two primary factors to consider when talking spending and debt: healthcare spending will double to 14 percent and net interest payments – assuming interest rates remain the same – will soar to nearly five percent from the current 1.3 percent.

It was discovered that under President Obama’s last budget, the national debt is expected to skyrocket to $25 trillion within the next 10 years. Despite the federal budget deficit to fall below $600 billion, it is expected to go back up to $1 trillion in the next few years.

Here is what economist Murray N. Rothbard wrote in 1992:

“Deficits and a mounting debt, therefore, are a growing and intolerable burden on the society and economy, both because they raise the tax burden and increasingly drain resources from the productive to the parasitic, counterproductive, ‘public’ sector. Moreover, whenever deficits are financed by expanding bank credit — in other words, by creating new money — matters become still worse, since credit inflation creates permanent and rising price inflation as well as waves of boom-bust “business cycles.”

Following the mid-term elections this November, Washington will take part in yet another debt ceiling crisis debate. Both parties will grandstand: the Democrats will proclaim how important it is raise the ceiling, though they opposed it when the GOP was in the charge, while the Republicans will say the children’s futures are at stake, though they supported raising the debt ceiling when they were in the White House. (See this article.)