UNITED STATES (OBSERVATORY) – By the end of this year, the ratio of federal debt to US GDP will reach 78% – the maximum since 1950, writes The Washington Post referring to the forecast of the US Congressional Budget Office (CBO).
Debt is expected to increase to 96% of GDP by 2028 and ultimately may exceed the historical maximum of 106% achieved in 1946.
Currently, the federal government’s debt is about $ 15 trillion, the senior vice chairman of the Committee for the responsible federal budget (CRFB) Mark Goldwein.
The high level of debt in 1946 was due to an increase in expenses due to the Second World War. In other cases, a sharp increase in debt was caused by economic downturns. But now the debt burden is growing in a relatively healthy economy, which points to a structural gap between how much the country collects and how much it spends.
CBO predicts that the republican tax bill passed last year will increase the federal budget deficit by $ 1.84 trillion over the next 10 years. The leaders of the Republican Party argue that lowering taxes will provide an incentive for economic growth.
In its analysis, the Budget Office of the US Congress suggests that legislation to reduce the personal income tax will cease to exist until the end of this decade. However, Republicans have repeatedly stated that the tax cut will not be terminated, promising that the future Congress will take measures to extend the relevant law.
The committee for the responsible federal budget on Tuesday said that the US debt would reach about 200% of GDP in 2048 if the reduced taxes and a package of expenses agreed by the Congress in March of last year become permanent.
In 2017, the Budget Office of the US Congress predicted that the ratio of federal debt to GDP will reach 150% by 2047. This year, despite tax reform, the CBO expects the figure to be 148% by 2047.
The slight decline is partly due to a downward revision in spending on social security and health programs, such as Medicaid and Medicare. The Office also lowered its estimates of the cost of the child’s health insurance program and the Affordable Care Act, or Obamacare.
According to the US Treasury, the deficit of the state budget in May increased by 66% compared to the same period last year and amounted to $ 146.8 billion. This is the maximum monthly deficit since 2009.
Income of the US budget in the past month decreased by 9.7% in annual terms to $ 217.1 billion. At the same time, expenses grew by 10.7% to $ 363.9 billion.
During the first eight months of the fiscal year 2018, which began on October 1, 2017, the negative balance of the budget increased by 23% to $ 532.2 billion, compared to $ 432.9 billion in the same period a year earlier.
Budget expenditures since the beginning of the current financial year increased by 5.9% to $ 2.76 trillion, while receipts to the budget increased by 2.6% to $ 2.22 trillion.