U.S. on Track to Add $19 Trillion in New Debt Over 10 Years

The United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously forecast, as a result of rising costs for interest payments, veterans’ health care, retiree benefits and the military, the Congressional Budget Office said on Wednesday.

The new forecasts, released Wednesday afternoon, project a $1.4 trillion gap this year between what the government spends and what it takes in from tax revenues. Over the next decade, deficits will average $2 trillion annually, as tax receipts fail to keep pace with the rising costs of Social Security and Medicare benefits for retiring baby boomers. (...)

The projections could supercharge a partisan debate between President Biden and House Republicans over taxes, spending and the nation’s debt limit. Republicans are refusing to raise the limit, which caps the total amount of debt that the federal government may issue, unless Mr. Biden agrees to steep but unspecified spending cuts. That refusal threatens to set off a financial crisis and recession if the government is unable to pay all of its bills on time.

Raising the stakes of that standoff, the budget office said in a separate report on Wednesday that such a crisis could occur as soon as July — and possibly even earlier — if lawmakers do not agree to raise the $31.4 trillion limit, which the government technically hit last month.

While Republican lawmakers have blamed Mr. Biden and Democrats for the rising deficits, the report makes clear that bipartisan legislation — and the Fed’s interest rate increases — are to blame for the jump in debt projections.

Newly enacted legislation in the past nine months will add about $1.5 trillion to cumulative deficits over the next decade, the budget office said. More than half that increase comes from a single law: an expansion of health care benefits for military veterans who were exposed to toxic burn pits. That bill passed overwhelmingly in the House and Senate, with majorities of Republicans in both chambers voting yes. Another $550 billion in additional deficits is attributable to increased military spending, which also has strong bipartisan support.

In contrast, the budget office said Mr. Biden’s signature climate, tax and health care bill, which passed with only Democratic votes, would modestly reduce deficits over the next decade. That’s because the bill’s spending and tax credits were more than offset by its tax increases on corporations and high earners, along with its efforts to reduce the government’s spending on prescription drugs for retirees. (...)

America’s $31.4 trillion national debt is the product of policy choices and economic shocks, largely since the turn of the century, when the federal government last spent less money than it received in tax revenues. Tax cuts signed into law by Presidents George W. Bush, Barack Obama and Donald J. Trump reduced government revenues. Wars in Iraq and Afghanistan started under Mr. Bush were not offset by tax increases. Mr. Obama, Mr. Trump and Mr. Biden signed trillions of dollars of emergency spending to combat the 2008 financial crisis and the 2020 pandemic recession.

The new report from the budget office confirmed what analysts have predicted for years: that the costs of providing Social Security and Medicare benefits to retiring baby boomers are set to grow rapidly in the decade to come.

Mr. Biden was preparing on Wednesday to hit back at Republicans on the debt, highlighting the new House majority’s plans to extend expiring tax cuts signed into law under Mr. Trump and repeal tax increases on high earners and corporations that Mr. Biden signed into law last year.

by Jim Tankersley and Alan Rappeport, NY Times | Read more:
Image: Kenny Holston/The New York Times
[ed. What a surprise. Massive tax cuts, less revenue. An aging population. Veteran's benefits for two forever wars. Military spending approaching $800 billion annually. It's not rocket science.]