A new report by the Congressional Budget Office (CBO) predicts the federal government’s debt and deficit will continue to expand over the next 10 years.
“Budget and Economic Outlook: 2018 to 2028” projects the total amount of debt owed by the U.S. government will exceed $29 trillion, or 96 percent of the country’s gross domestic product, in 2028.
The federal deficit will top $1.526 trillion by 2028, CBO projects, because of a forecasted 7.96 percent annual increase in mandatory outlays, including entitlement programs, over the next 10 years.
Here Today, Taxed Tomorrow
Jonathan Bydlak, president of the Coalition to Reduce Spending and a policy advisor for The Heartland Institute, which publishes Budget & Tax News, says chronic budget deficits lead to tax hikes.
“Having a deficit during a Fiscal Year is one thing; running consistent deficits is quite another,” Bydlak said. “They ultimately have to be paid back. When governments spend more than they take in, future taxpayers will have to pay for that difference. In essence, running deficits today makes the cost of government goods and services more expensive tomorrow.”
Expecting a Financial Collapse
Barry Poulson, an emeritus professor of economics at the University of Colorado and a policy advisor to The Heartland Institute, says continued excessive spending is endangering the country’s future economic well-being.
“The longer the U.S. fails to address this debt crisis, the more difficult it will be to close the fiscal gap,” Poulson said. “Failure to escape this debt trap would be catastrophic for the U.S. We should expect a flight of capital as investors sell off dollars and U.S. securities. This would lead to a collapse of financial institutions, similar to that experienced during the Great Depression. The outcome of such a financial crisis would be economic stagnation, falling incomes, rising unemployment, and pervasive poverty.”
Bydlak says government debt and deficits are symptoms of a more fundamental illness.
“It’s not just deficits that are the problem, but spending itself,” Bydlak said. “Just because there isn’t an economic meltdown happening at the moment doesn’t mean that we aren’t dealing with the consequences of high spending and that we aren’t paving the way for economic difficulty in the future.
“Just because we can pay for government programs doesn’t mean we should, if government isn’t the best entity for providing a particular good or service,” Bydlak said.