The nonpartisan Congressional Budget Office released an estimate Tuesday saying that by 2023, the federal debt will be $7 trillion larger.
“If current laws remain in place, debt will equal 77 percent of GDP and be on an upward path,” CBO projects.
Based on their modeling, the deficit will total $845 billion in 2013, making it the first year in five years to have a deficit below $1 trillion.
“With such deficits, federal debt would remain above 73 percent of GDP — far higher than the 39 percent average seen over the past four decades,” says the CBO.
Economists commonly recommend that the debt-to-GDP ratio should not exceed 60 percent. It currently exceeds 70 percent.
“The CBO’s report is yet another warning that we need to get spending under control,” House budget committee chair Paul Ryan said last week. “The deficit is still unsustainable. By 2023, our national debt will hit $26 trillion. We can’t let that happen. We need to budget responsibly, so we can keep our commitments and expand opportunity.”
Included in the CBO’s budget outlook is the future of medical insurance programs. The CBO projects that 7 million people will no longer have employer-provided health insurance by 2022, because of changes required by the Affordable Care Act.
The cost of Social Security is expected to nearly double over the next ten years, from $773 billion in 2012 to $1.43 trillion in 2023.
G. William Hoagland, senior vice president of the Bipartisan Policy Center, testified before Congress that by 2022, the debt will be $27 trillion. Hoagland agreed that the debt-to-GDP ratio will reach 77 percent.
In all, the CBO expects economic growth to be slow for the remainder of the year as the expected budgetary cuts take place. Following 2013, the CBO estimates economic growth will speed up, “causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels,” the CBO writes.
“Nevertheless, the unemployment rate is expected to remain above 7½ percent through next year,” making 2014 the sixth consecutive year with unemployment exceeding 7.5 percent — the longest period of extended unemployment in the last 70 years.