WASHINGTON, DC – Senator Dan Coats (R-Ind.), chairman of the Joint Economic Committee, said today’s report by the non-partisan Congressional Budget Office (CBO) shows why Congress must take action to address the rapidly escalating federal debt.
The report, entitled “The 2016 Long-Term Budget Outlook,” warns if current law doesn’t change, “Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy. The amount of debt that is projected in the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis, an occurrence in which investors become unwilling to finance a government’s borrowing needs unless they are compensated with very high interest rates.”
“Today’s report should encourage Congress to take immediate action to reduce our federal debt,” said Coats. “According to CBO’s report, our country’s large and growing federal debt is hurting our economy and reducing savings and wages nationwide. Congress must make smart reforms now to our mandatory spending programs to address this looming crisis.”
Key highlights of the report include:
- The high projected debt will increase the likelihood of a fiscal crisis and will make it much harder for policymakers to respond to such a crisis.
- CBO projects that the combined Social Security trust funds will be exhausted by 2029, five years earlier than the Social Security trustees estimated, forcing automatic benefit cuts on seniors and people with disabilities.
- Mandatory programs, like Medicare and Social Security, and payments on the nation’s debt account for nearly 70 percent of all federal spending.
- In a single year, CBO increased its debt to GDP projection from 107% to 122% because of lower economic growth and revenues.
The Congressional Budget Office is responsible for providing independent analysis of the U.S. budget to guide lawmakers as they set federal budget policy. Each year, CBO releases its projections for the nation’s finances over a twenty-five year period.