Congressional Budget Office Warns: National Debt Could be Breaking Bad for US Economy

Breaking Bad News

In a recent hearing on Capitol Hill Director of the Congressional Budget Office (CBO) Philip Swagel delivered some alarming news to House lawmakers: the national debt and the cost of paying interest on it could pose an existential threat to the U.S. economy.

The Danger of Debt

According to the CBO's semi annual report the U.S. budget deficit is projected to grow by $1 trillion over the next 10 years. The report also predicts that net interest as a percentage of GDP will surpass non defense discretionary spending by 2024. Swagel highlighted high interest rates an aging population and rising healthcare costs as factors contributing to the growing national debt which is projected to reach a record 116% of GDP by 2034.

Swagel's Solutions

"Under current law there would not be enough resources to pay the promised benefits of Social Security," warned Swagel. He emphasized the need for changes to the tax code to bring in more revenue and criticized the tax cuts implemented by former President Donald Trump stating that they disproportionately benefited the wealthy. Swagel also highlighted the positive impact that increased immigration could have on the economy projecting higher GDP growth and increased government revenue.

Bipartisan Praise and Criticism

Republicans on the committee praised the Fiscal Responsibility Act of 2023 for slightly reducing the deficit. However Democratic Representative Dan Kildee argued that reducing the deficit would require a comprehensive approach that includes examining the entire budget rather than cutting programs that benefit families seniors and children.

Looking Ahead

Swagel informed lawmakers that the next deficit update will incorporate President Joe Biden's proposed budget and any new laws passed by Congress. It remains to be seen how the ongoing efforts to address the national debt will unfold.