That is a massive amount of debt that means some important, but difficult, budgetary decisions will need to be made in the coming years. The CBO cautioned Wednesday that the risk of a “fiscal crisis” will increase as debt rises and investors begin to doubt the government’s fiscal footing.
, a large drop in the value of the dollar, or a loss of confidence in the government’s commitment to repay its debt in full, all of which would make a fiscal crisis more likely,” the CBO added.long-term budget outlook in June 2023, which predicted public debt would expand to 181% of GDP by 2053. In February, the CBO predicted the federal budget deficit would be $1.6 trillion in fiscal 2024, down slightly from fiscal 2023’s deficit of $1.7 trillion. That is in part because of last year’s Fiscal Responsibility Act, a bipartisan deal that capped discretionaryas part of the debt limit negotiations. While that is a decrease, the budget deficit is still historically high.
Outside of debt and deficits, the Wednesday CBO report also included forecasts for other crucial economic metrics. The country has been grappling with the worst inflation in decades, which has fallen over the past year but still remains about a percentage point above the Federal Reserve’s preferred 2% level.