CBO sees U.S. federal debt nearly double size of economy in 2050 by Bloomberg

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© Bloomberg. The U.S. Capitol stands in front of the columns of the U.S. Supreme Court at dusk in Washington, DC, United States, Thursday, April 16, 2020. President Donald Trump on Wednesday threatened to try to force both houses of Congress to adjourn – an unprecedented measure that will likely raise a constitutional challenge – so that he can appoint members of the government without Senate approval.

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(Bloomberg) – U.S. government debt will grow over the next 30 years to almost double the size of the economy, increasing the risk of a budget crisis or a decline in the value of Treasuries, said Monday the Congressional Budget Office.

The non-partisan agency, in its long-term fiscal outlook, projected debt will reach 195% of gross domestic product in 2050, up from 98% this year and 79% in 2019. This compares to the earlier 2050 forecast of 180% at starting in January, before the coronavirus pandemic hits the country and prompts Congress to pass roughly $ 3 trillion in stimulus.

While low interest rates “indicate that debt is manageable for now and that fiscal policy could be used to meet national priorities,” the fiscal path is unsustainable over the next few decades and costs are low. ‘borrowing will eventually become a problem, CBO director Phillip Swagel said in a statement.

Read more: US $ 20 trillion debt gets cheaper as it grows

Some researchers increasingly dispute these views in recent years. The modern monetary school of theory argues that countries like the United States, which borrow in their own currencies, do not need to worry about increasing debt to support growth, as long as inflation remains under control.

© 2020 Bloomberg L.P.

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