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The United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously forecast, as a result of rising costs for interest payments, veterans’ health care, retiree benefits and the military, the Congressional Budget Office said on February 15th.
The new forecasts project a $1.4 trillion gap this year between what the government spends and what it takes in from tax revenues. Over the next decade, deficits will average $2 trillion annually, as tax receipts fail to keep pace with the rising costs of Social Security and Medicare benefits for retiring baby boomers.
To put those numbers in context, the total amount of debt held by the public will equal the total annual output of the U.S. economy in 2024, rising to 118 percent of the economy by 2033.
Congress’ nonpartisan budget scorekeeper now projects that the U.S. economy will barely grow this year, after adjusting for inflation, and that the unemployment rate will rise above 5 percent, before growth re-accelerates next year. It attributes the slowdown in growth to the Federal Reserve’s campaign to tame inflation by raising interest rates, which is aimed at cooling the economy and the labor market.
According to The New York Times, a financial crisis and recession may be looming if the government is unable to pay all of its bills on time.
“Over the long term, our projections suggest that changes in fiscal policy must be made to address the rising costs of interest and mitigate other adverse consequences of high and rising debt,” said Phillip L. Swagel, director of the budget office.
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