President Biden’s budget for fiscal year 2023 would cause U.S. debt to “rise to record levels within a decade,” according to an analysis from the Committee for a Responsible Federal Budget, a non-profit public policy organization.
“Debt would rise to record levels within a decade, from 102.4 percent of Gross Domestic Product (GDP) at the end of FY 2022 to 106.7 percent by 2032. Prior to the pandemic, debt was less than 80 percent of GDP. Nominal debt would grow from $24.8 trillion at the end of FY 2022 to $39.5 trillion by 2032,” a summary of the analysis states. “Deficits would total $14.4 trillion (4.7 percent of GDP) over the next decade. Though expiring COVID relief will cause annual deficits to decline from $2.8 trillion (12.4 percent of GDP) in FY 2021 to below $1.2 trillion (4.5 percent of GDP) in 2023, they would never fall below $1 trillion and would grow back to $1.8 trillion (4.8 percent of GDP) by 2032.”
“Excluding Build Back Better, spending and revenue would average 23.4 and 18.8 percent of GDP, respectively, over the next decade. This would be higher than the Administration’s baseline projection of 23.0 and 18.0 percent of GDP, respectively, and above the 50-year averages of 20.9 and 17.3 percent. Inclusive of Build Back Better, spending and revenue would be even higher,” it continues. “Deficits would be about $1 trillion lower over a decade. This includes $1.66 trillion of new spending and tax breaks offset by $2.61 trillion of tax increases and spending reductions and $95 billion of interest savings. This assumes a deficit-neutral Build Back Better agenda.”
“The budget relies on somewhat optimistic and outdated economic assumptions. Like other forecasters, the budget assumes high near-term inflation, low unemployment, and rising interest rates. However, its long-term real GDP growth assumption is 0.4 percentage points above the Blue Chip consensus, 0.5 points above the Federal Reserve, and 0.6 points above CBO,” it added.
