Publicly hed US government debt to reach 82% of GDP in 10 years

Some great news from the Congressional Budget Office to start the day. From the U.S. News and World Report summary:

The Congressional Budget Office has just released two reports--one on Obama's budget, the other on the long-term fiscal outlook--that give some more concrete numbers on the coming growth of both the annual deficit and the long-term debt. Of course, it's nothing new that America isn't in great fiscal shape, but attaching numbers to that realization is necessary to really comprehend what's going on.

The CBO finds that under President Obama's budget, the deficit would be $9.9 trillion, or 9.9 percent of GDP, in 2009. Accompanying this, the CBO also finds the total debt held by the public to rise from 57 percent of GDP in 2009 to 82 percent (!) of GDP in 2019.

Apparently, CBO Director, Douglas Elmendorf, has a blog (who doesn't?) and his related entry concludes that current fiscal policy is unsustainable (big surprise) and that something has to be done now!

Under current law, the federal budget is on an unsustainable path—meaning that federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly under any plausible scenario. Unless tax revenues increase just as rapidly, the rise in spending will produce growing budget deficits and accumulating debt. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress income growth in the United States.

Keeping deficits and debt from reaching levels that could cause substantial harm to the economy would require increasing revenues significantly as a percentage of gross domestic product (GDP), decreasing projected spending sharply, or some combination of the two. Making such changes sooner rather than later would lessen the risks that current fiscal policy poses to the economy. Although the policy choices that will be necessary are difficult, CBO’s long-term budget projections make clear that doing nothing is not an option: Legislation must ultimately be adopted that raises revenue or reduces spending or both. Moreover, delaying action simply exacerbates the challenge, as is discussed in the report.