Five Ideas to Rein in Long-Term Federal Debt

The federal government had a long-term debt problem even before the COVID-19 pandemic appeared on the radar. The public health and economic crises now engulfing the country and the world have exacerbated it in dramatic fashion. Five gradual entitlement program adjustments would constitute a sensible, initial course correction. They should be adopted by Congress after the current crisis has passed.

In January, the Congressional Budget Office (CBO) projected federal debt would exceed 100 percent of GDP in 2031 and reach 180 percent of GDP in 2050. That dire forecast is now obsolete because it is too optimistic. Congress passed four emergency spending bills in March and April to address the public health emergency and the economic crisis it precipitated. In a preliminary revision of its budget projections, released in April, CBO estimated federal debt would reach 100 percent of GDP this year and 108 percent in 2021. A longer-term forcecast is sure to show debt climbing past 180 percent of GDP well before 2050.

Now is not the right time to focus on fiscal restraint. The current emergency is far from over, and the nation’s leaders should be working to minimize its damage. That means passing additional legislation this summer to support state and local government budgets and to make it easier for Americans to stay covered with health insurance. Such a measure will be expensive and add to the deficits expected for this year and next.

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