WASHINGTON D.C. – Many Democrats pointed to the Congressional Budget Office’s revised deficit figures as proof that the national debt is not as large of a threat as previously feared.
But a closer look at America’s debt reveals a much different â€” and alarming â€” reality. In mid-May, the CBO said the federal deficit in fiscal 2013, which ends in September, will be $642 billion, down from theÂ $1 trillion-plus of the previous four years.
“We don’t have an immediate crisis in terms of debt,” President Obama said in an interview with ABC News. “In fact for the next 10 years it’s going to be in a sustainable place.”
But “after years of bipartisan overspending, public debt today â€” that’s the money that the federal government owes to domestic and foreign investors â€” is almost 90 percent higher than at the onset of the financial crisis in 2008,” according to Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University. “It climbed by $1 trillion between December 2011 and December 2012 alone to its current level of $12.03 trillion.”
Public debt is now 75 percent of GDP, the highest level since 1950 â€” and that doesn’t include debt the government owes to Social Security and other accounts.
But the worst is yet to come. The CBO projects that the public debt is scheduled to grow to $19 trillion by 2023, or 73.6 percent of projected GDP â€” up from 36 percent as recently as the end of 2007.
But if Congress reverses the spending cuts forced through sequestration, the public debt will rise to 83 percent of GDP, the CBO projects.
By 2023, the federal government is expected to spend $823 billion a year on interest payments, up from $223 billion today. Interest payments plus entitlement programs such as Social Security, Medicare, and Medicaid will account for 75 percent of the federal budget, and other programs will “gradually be squeezed out,” de Rugy writes for Reason magazine.
She concludes: “Congress should circumvent these scenarios by acting now to cut spending and reduce future entitlement obligations. No level of taxes can address the phenomenal fiscal imbalance that our country is facing now and into the future.
“History will not judge the debt-denialists kindly.”