Federal Debt to Reach 106% of U.S. Economy in 2039, CBO Says

[jaichind]

See

http://www.cbo.gov/publication/45471

for latest CBO projections.  



These projections already takes assumes revenue will rise from 17.6% of GDP to 22%-23% of GDP over the next 50 years.  But it seems spending will easily outstrip that.

It seems that revenue has to go up and keep the social programs as comprehensive as possible so it is not seen as a redistribution to the poor (Dem position) or various social programs will have to be cut it back plus means testing which in turn will make it look like a redistribution program which makes it more likely they can be cut (GOP position.)

Since I am working now I am for the GOP position, once I go into semi-retirement and then full retirements over the next few years most likely I will shift to the Dem position as I would not have that much earned income for the government to tax but means testing of social benefits will kill me.  I definitely see myself voting Dem by 2020.

[CatoMinor]

Clearly this is because the stimulus was too small.

[eric82oslo]

Since I am working now I am for the GOP position, once I go into semi-retirement and then full retirements over the next few years most likely I will shift to the Dem position as I would not have that much earned income for the government to tax but means testing of social benefits will kill me.  I definitely see myself voting Dem by 2020.

It's not very empathic of you to only think of yourself.
If everyone thought like you, there would be no society at all. Only independent individuals, anarchaic chaos and lawlessness.

[RI]

I guess that's good for people's portfolios; there won't be a shortage of government bonds to buy for retirement. For everyone else, this is interesting but irrelevant.

[King]

I'm perfectly fine with us passing massive spending cuts and tax increases to go in effect for the FY 2025-2039 years. That would fix your scary projections and not destroy our economy when it's still on the growth phase.

[jaichind]

Of course another solution is financial repression where the debt becomes monetized through higher inflation.  In such a case investing in fixed income is the kiss of death during that period.

[AggregateDemand]

I'm perfectly fine with us passing massive spending cuts and tax increases to go in effect for the FY 2025-2039 years. That would fix your scary projections and not destroy our economy when it's still on the growth phase.

CBO forecasts don't model economic counterfactuals. The economy will sag as baby-boomers move through the FICA system. Spending decreases and tax increases would probably make the problem much worse.

The same problem has existed since the 1980s, and we always choose to spend more and tax less, rather than reform our broken system.

[King]

The economy will sag as baby-boomers move through the FICA system.

Can I have something to back up this statement? Not sure myself, but common sense suggests boomer retirements should open up a lot of career opportunities and unleash a lot of retirement $$$ consumption.

[angus]

[Simfan34]

The economy will sag as baby-boomers move through the FICA system.

Can I have something to back up this statement? Not sure myself, but common sense suggests boomer retirements should open up a lot of career opportunities and unleash a lot of retirement $$$ consumption.

Yes, but how much money is that going to be?

[○∙◄☻¥tπ[╪AV┼cVê└]

Yeah, he made the economy blow up in 2008.....

[AggregateDemand]

Can I have something to back up this statement? Not sure myself, but common sense suggests boomer retirements should open up a lot of career opportunities and unleash a lot of retirement $$$ consumption.

If you look through CBO documents for a couple of minutes, you'll find the data you need. CBO have been demanding SS and MED reform since the late-90s. They have plenty of ugly models, and BEA have the counterfactual studies that detail the real scope of the problem.

[Person Man]

Yeah, he made the economy blow up in 2008.....

But we could have just used austerity to balance the loss of revenue and though we would have stagnated with 12% unemployment and less than 1% growth, at least we would have zero inflation and our values, right? We all could learn something from the 1880s.

[Blue3]

Re: Federal Debt to Reach 106% of U.S. Economy in 2039, CBO Says

Looks like the debt is better than I thought. I thought we were already past 100%, or would be by the end of the decade.

[AggregateDemand]

Looks like the debt is better than I thought. I thought we were already past 100%, or would be by the end of the decade.

The article only refers to public debt. Unlike national debt, public debt does not include intragovernment holdings. The article does not include the trillions we've borrowed from the SS trust fund, nor does it consider the enormous unfunded liabilities for SS and MED, which will both become part of the national debt, if we do not raise taxes on the middle class or reform spending.

The same public/national confusion led people to believe that the national debt was falling during the Clinton administration, which supported the balanced budget that never was.

[Lief 🗽]

Most of us will be dead or dying by then anyway, so I'm not sure what the concern is.

[TheDeadFlagBlues]

This chart is meaningless: you can't forecast growth rates, revenue or government spending for a lengthy time horizon. The forecasts of astrologists or palm readers are as accurate as the forecasts of economists. This isn't an indictment of economists: you can't accurately predict the behavior of political actors.