WASHINGTON (AP) — A budget scorekeeper for U.S. lawmakers projected that federal debt compared to the size of the economy will reach 78 percent this fiscal year, the highest level in nearly seven decades, and that it will grow sharply from there over the next three decades.
The Congressional Budget Office predicts the debt will grow as government revenue flattens out in the next few years in relation to the size of the economy. Meanwhile, spending on Social Security, Medicare and interest payments will jump.
Keith Hall, the CBO’s director, said the prospect of large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.
For example, the debt could make it more difficult for the U.S. to respond to a financial crisis through tax cuts or spending increases.
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The CBO’s report emphasized that more of the government’s spending in the coming decades will be dedicated to servicing the debt, to the point that interest payments by 2048 could equal spending for Social Security, currently the largest federal program.
Senate Minority Leader Chuck Schumer, D-N.Y., cited the report to criticize the tax cuts that went into effect this year.
“The Republican strategy is clear: increase the deficit on behalf of special interests, then use that as an excuse to slash benefits that hardworking Americans have earned,” Schumer said. “Democrats will do everything possible to prevent that from happening.”
Republicans have said the tax cuts were necessary to grow the economy and would pay for themselves in the long run. They’ve sought to respond to concerns about spending by trying to cut almost $15 billion in unused government money slated for children’s health insurance and other programs, but the measure faltered in the Senate.
CBO’s numbers assume that Congress will act to prevent the debt from growing more rapidly by cutting spending and letting many of the recent tax cuts expire.
If tax and spending policies are extended, which is likely, “the fiscal situation will be much more dire,” said the Committee for a Responsible Budget, a budget watchdog.