CBO Report: Budget Skyrockets After Two Decades
August 3, 1998
In a document entitled "Long-Term Budgetary Pressures and Policy Options," the Congressional Budget Office projects what will happen to the federal budget after 2020. Those who have looked at the report say it should make any American's hair stand on end.
- Things look pretty good until 2020 -- when the government's debt will have gone from 47 percent of gross domestic product (GDP) today to about 17 percent.
- After that, federal receipts will remain constant at about 20 percent of GDP -- but government debt will zoom to about 206 percent of GDP by 2050.
- Spending for Social Security, Medicaid and Medicare will skyrocket from 8 percent of GDP to 17 percent in the year 2040 -- thanks to all the promises federal bureaucrats and politicians made to the baby boomers.
- The CBO estimates that the only way to avoid that mess down the road would be by immediately and permanently reducing spending or raising taxes by 8 percent.
If nothing is done until the year 2030, we'll need a spending cut or tax hike of 22 percent.
Source: N. Gregory Mankiw (Harvard), "Government Debt: A Horror Story," Fortune, August 3, 1998.
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