National debt to hit levels not seen since WWII

WASHINGTON (CN) – The Congressional Budget Office predicted Wednesday that the federal deficit will average $1.2 trillion between 2020 and 2029, causing the federal debt to rise to levels not seen since just after World War II.

In updates to its projections for the budget and economic outlook released Wednesday, the nonpartisan office added $63 billion to its expected deficit for 2019, now predicting the federal government will be $960 billion in the red this year.

The office blamed the new deficit projections in large part on the budget agreement Congress passed earlier this month, which increased caps on discretionary spending. The report said this would increase projected deficits by $1.5 trillion from 2020-29.

The report also notes that the Republican-backed tax cuts have cut into federal tax revenues in 2019.

Thanks to the booming deficits, the CBO expects the federal debt to rise to 95 percent of gross domestic product, up from 79% today. That would be the highest debt has climbed as a share of GDP since 1947, when it was at 104% of GDP in the wake of World War II.

Rising health care spending and an older population will also contribute to the increase in the debt, according to the report.

The $1.2 trillion projected deficit starting in 2020 would be the highest since 2011, when it stood at $1.3 trillion in the midst of a recession.

In a statement on the updated outlook, CBO Director Philip Swagel called the country’s fiscal situation “challenging.”

“To put it on a sustainable course, lawmakers will have to make significant changes to tax and spending policies – making revenues larger than they would be under current law, reducing spending below projected amounts, or adopting some combination of those approaches,” Swagel wrote.

Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, said lawmakers should respond to the upped projections by committing to paying for future legislation.

“Between the budget deal, the tax cuts and other recent unpaid-for legislation, policymakers have roughly doubled near-term deficits over just the past few years,” MacGuineas said in a statement. “Shame on them for not instead reducing projected debt to give us more room to fight the next recession and manage the aging of the population.”