Download the latest CBO long-term forecast here: https://www.cbo.gov/publication/56598
I just did a relatively rosy forecast a few weeks ago that saw the 150% debt to GDP being surpassed in 2052. The CBO sees that level reached by about 2042. Here is a warning from the report: If debt as a percentage of GDP rises indefinitely, then debt will become unsustainable because the costs of financing deficits and servicing the debt will consume an ever-growing proportion of the nation’s income.
By 2050, the CBO predicts that debt as a percentage of GDP will reach 195% by 2050, whereas I was only predicting 148% in that year.
The CBO doesn't see a tipping point: In CBO’s assessment, the debt-to-GDP ratio has no set tipping point at which a crisis becomes likely or imminent; nor is there an identifiable set point at which interest costs as a percentage of GDP become unsustainable.
I need to update my forecast when I have time.
My question is: can we keep incurring massive deficits forever? Have we truly discovered the magical money tree, the fountain of youth? Or will the money tree stop growing fruit and die at some point?
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