On the 784th day since the Democrats who run the U.S. Senate last passed a federal budget, and in the midst of their calls – echoed by former DNC Chairman Tim Kaine – for a $2 trillion debt ceiling increase without any substantive spending reforms, the non-partisan Congressional Budget Office (CBO) today released a deeply troubling report on our country’s fiscal future.
In its latest update of The Long-Term Budget Outlook, the CBO provides an overview of the looming debt crisis and projects that by the end of this year, the federal debt will reach roughly 70 percent of gross domestic product (GDP) — the highest percentage since shortly after World War II.
“Years of borrowed spending and bigger government have brought our country to the most predictable economic crisis in American history – but instead of passing a budget in the last 784 days Tim Kaine and his fellow Washington Democrats want to just increase our credit card limit by another $2 trillion,” said National Republican Senatorial Committee (NRSC) spokesman Chris Bond today. “It’s a remarkable failure of leadership, and it’s time for Kaine to be honest about the very serious challenges facing our country in the wake of the failed economic agenda he has been cheerleading in Washington.”
For your background, CBO’s report includes the following key findings:
- The CBO projects that government spending as a share of the economy will increase by nearly 70 percent between now and 2035, up from its historical average of roughly 20 percent. Taxes are projected to rise to the historical average in the years ahead, yet the unprecedented growth in government spending is projected to rise much faster, driving an unsustainable explosion in debt.
- The crushing burden of debt is driven primarily by the nation’s largest entitlement programs – Social Security, Medicare, and Medicaid – along with the compounding growth in interest payments on the debt.
- Our unsustainable policies are increasing the likelihood of a devastating crisis: The CBO report states that “Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.”
- According to the CBO report, the federal government’s interest payments alone are projected to consume 9 percent of our entire economy by 2035, up from about 1 percent today.
- The CBO report affirms that the massive health-care overhaul fails to address the explosion in health care costs. Mandatory federal spending on health care will increase by 86 percent from 5.6 percent of GDP today to 10.4 percent of GDP over the next 24 years.
(“CBO’s 2011 Long-Term Budget Outlook,” Congressional Budget Office, 6/22/11)
