Federal Debt

At 78 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, CBO projects growing budget deficits would boost that debt sharply over the next 30 years; it would approach 100 percent of GDP by the end of the next decade and 152 percent by 2048. That amount would be the highest in the nation’s history by far.

 

In total, deficits would rise from 3.9 percent of GDP in 2018 to 9.5 percent in 2048. (Adjusted to exclude the effects of timing shifts that occur because fiscal year 2018 began on a weekend, the budget deficit in 2018 would be higher, at 4.2 percent of GDP). Those large budget deficits would arise because spending would grow steadily under current law, and revenues would not keep pace with that spending growth.

In particular, over the next 30 years, spending as a share of GDP would increase for Social Security, the major health care programs (primarily Medicare), and interest on the government’s debt. In CBO’s projections, most of the spending growth for Social Security and Medicare results from the aging of the population: As members of the baby-boom generation (people born between 1946 and 1964) age and as life expectancy continues to rise, the percentage of the population age 65 or older will grow sharply, boosting the number of beneficiaries of those programs. Growth in spending on Medicare and the other major health care programs is also driven by rising health care costs per person. In addition, the federal government’s net interest costs are projected to climb sharply as a percentage of GDP as interest rates rise from their currently low levels and as debt accumulates.

CBO also anticipates that if current laws generally did not change, real GDP—that is, GDP with the effects of inflation removed—would increase by 1.9 percent per year, on average, over the next 30 years. That rate is nearly 1 percentage point lower than the annual average growth rate of real GDP over the past 50 years.

If lawmakers wanted to reduce the amount of debt in 2048 to 41 percent of GDP (its average over the past 50 years), they might cut noninterest spending, increase revenues, or take a combination of both approaches to make changes that equaled 3.0 percent of GDP each year starting in 2019. (In dollar terms, that amount would total about $630 billion in 2019.) If, instead, policymakers wanted debt in 2048 to equal its current share of GDP (78 percent), the necessary changes would be smaller (although still substantial), totaling 1.9 percent of GDP per year (or about $400 billion in 2019). The longer lawmakers waited to act, the larger the policy changes would need to be to reach any particular goal for federal debt.

(This is from the recent report by CBO)

So, the easy promises made earlier governments will have to be broken. Or taxes raised to a crippling level. Or default. Or--the new trial balloon--a wealth tax, that is the confiscation of citizens' properties as is done now under American Asset Forfeiture Law. That assumption of state power typically applies to the alleged proceeds or instruments of crime. This applies, but is not limited, to terrorist activities, drug related crimes, and other criminal and even civil offenses.

No reason it could not be applied to the average working guy.