The Committee for a Responsible Federal Budget (CRFB) has released an analysis of the Congressional Budget Office’s (CBO) recently published Long-Term Budget Outlook. The analysis underscores several alarming economic trends predicted for the United States over the forthcoming 30 years.
According to the CRFB's findings, the Long-Term Budget Outlook forecasts that federal debt held by the public will escalate from 97% of Gross Domestic Product (GDP) in FY 2023 to an unprecedented 166% of GDP by 2054. The CBO also anticipates deficits to surge from 5.6% of GDP in FY 2024 to 8.5% of GDP by 2054. "The 2054 deficit will be more than twice the 50-year historical average and higher than any time in modern history outside of World War II, the Great Recession, and the COVID-19 pandemic," says the report.
In terms of spending, which is expected to significantly outpace revenue, the CBO predicts an increase from 23.1% of GDP in FY 2024 to 24.1% by 2034 and then to 27.3% by 2054 according to CRFB's analysis. "Interest costs will also explode, more than doubling as a share of the economy by 2054 and becoming the single largest line item in the federal budget by 2051," it states. Revenue growth is also projected but at a slower rate, increasing from 17.5% of GDP in FY2024 to18.8% by FY2054.
Although slightly less worrisome than last year’s outlook, CRFB highlights that soaring debt, rapidly escalating deficits, and spending far surpassing revenue pose risks to both U.S budget and economy. High levels of debt could jeopardize economic growth and vitality while rising interest payments on national debt may lead to new geopolitical challenges and risks. It could also weaken the nation’s ability to respond to recessions or other crises and create intergenerational imbalances.
"Unfortunately, the long-term outlook could be far worse than CBO projects," CRFB warns. "Under alternative scenarios that assume various tax and spending provisions are extended without offsets and discretionary spending grows with the economy, among other assumptions, debt could reach 200 to 300% of GDP by FY 2054 and continue to grow rapidly thereafter."
