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According to the latest projections issued by the Congressional Budget Office, the publicly-held portion of the U.S. national debt will rise from 74% of GDP at present to surpass 107% of GDP in 25 years. Bloomberg‘s Kasia Klimasinska describes the CBO’s findings:
U.S. government debt held by the public is expected to rise to 107 percent of the economy in 2040 from 74 percent this year, the Congressional Budget Office said, citing an aging population and rising health-care costs.
With debt “already unusually high” relative to gross domestic product, “further sustained increases could be especially harmful to economic growth,” the CBO said in a long-term fiscal report released Tuesday in Washington. “To put the federal budget on a sustainable path for the long term, lawmakers would have to make major changes to tax policies, spending policies, or both.”
The chart below shows the CBO’s lastest projections for the U.S. government’s revenues, spending and the portion of the national debt held by the public:
According to the CBO’s alternative fiscal scenario, the CBO projects that the portion of the national debt held by the public will exceed 250% by 2055 – the level at which the CBO believes the U.S. may enter a debt death spiral. That’s quite a difference that an additional 15 years makes for the projections based on the kinds of choices that U.S. politicians have made about spending in the past.
But that’s just the portion of the national debt held by the public. If you look at the U.S. government’s total public debt outstanding at the end of the first quarter of 2015, you’ll find that it is already 102.7% of the nation’s GDP.