Budget watchdog sounds alarm over US debt exceeding records in just 5 years: 'Chilling'
CBO projects national debt is on track to exceed records by 2028 and top 118% of GDP by 2023
After the bipartisan Congressional Budget Office (CBO) projected U.S. national debt will continue to get worse, one of the industry’s watchdog is signaling that its latest economic outlook is "chilling."
Last week the Committee for a Responsible Budget noted that the CBO's latest Budget and Economic Outlook projected that the national debt is on track to exceed records by 2028 and top 118% of U.S. gross domestic product (GDP) by 2023.
"Hopefully this will get lawmakers to take seriously the negotiations that they're in the midst of on how to raise the debt ceiling," Committee for a Responsible Federal Budget President Maya MacGuineas said on "Mornings with Maria" Thursday. "There should be no talk of default. It's really dangerous."
The CBO's baseline budget forecast for the 2023-2033 period finds that the amount of debt held by the public will be $25.716 trillion in 2023 and rise to $46.445 trillion in 2033, an increase of $20.729 trillion over the course of the next 10 years.
SEN. RICK SCOTT DOUBLES DOWN ON PLAN TO ‘FIX’ SOCIAL SECURITY, MEDICARE AND ‘LIVE WITHIN OUR MEANS’
As a percentage of forecasted GDP, debt held by the public would rise from 98% of GDP in 2023 to 118.2% of GDP in 2033. CBO Director Phillip Swagel noted that trajectory will continue in the ensuing decades based on current budgetary policies, pushing the federal to 195% of GDP in 2053.
After 2023, the CBO also reported, growth of real GDP is projected to rise slightly, averaging 2.4 percent a year from 2024 to 2027 in response to declines in interest rates.
"One thing we really learned is that in the coming five years, in the next presidential term, there will be some very serious and dangerous milestones that we will hit. Our debt as a share of GDP will be the highest it has ever been in the history of this country, and that includes right after World War II," MacGuineas explained.
Another impact Americans will feel is Medicare’s trust fund Part A running and becoming insolvent, the budget watchdog claimed, as well as interest payments rising in correlation to how much the U.S. spends on defense.
"That's how much interest payments, which are the fastest growing part of the budget, are going to be growing," MacGuineas said. "That will be the third-largest program in our entire budget, right after Social Security and Medicare."
Over the next decade, MacGuineas argued America will spend more than $10 trillion on interest payments alone.
"The news that came out of the Congressional Budget Office was really, really bad. It was chilling."
"Just a few years ago when interest rates were low, you had all sorts of economists clamoring, saying, 'Borrow more, borrow more. It's so cheap, it's almost free.' That wasn't true then, because when the government borrows money, it's saying you don't have to pay for it, someone down the road is going to pay for it," the committee president noted.
The government’s most "critical" goal right now remains solving the debt ceiling debate, and following that, MacGuineas advised lawmakers agree to "no new borrowing."
"I also hope we'll come up with some kind of a plan, maybe it will be spending caps, maybe a helpful commission that will be part of that," she said. "But as soon as we get through [the debt ceiling], we have to really push back on this, 'Don't touch Social Security,' and show that to be what it is – which is a promise for across-the-board benefit cuts."
FOX Business’ Eric Revell contributed to this report.