Economic Program | Memo
Iceberg Ahead: The Looming Deficit Threat in Latest CBO Report
Some in Washington greeted the CBO’s first big report of 2013 with applause. Citing a budget deficit that has dipped below $1 trillion, they say Congress is done controlling the debt.
But a sober look leads to different conclusions. Despite a recovering economy, debt will rise over the next decade, from 73% to 87% of GDP. Even if the sequester remains, debt-to-GDP will reach 82% in 2023. Most alarming is what’s just beyond the CBO’s ten-year forecast. As the baby boomers enter their seventies, rising social insurance costs drive debt-to-GDP past 130% in 2033.
Too many in both parties propose only to repeal or replace the sequester. We outline a different approach, one that saves twice as much as sequestration this decade and better prepares for the larger budget challenge coming in the next decade.
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