The Congressional Budget Office (CBO) projects deficits will run wild as the US national debt surpasses a staggering $141 trillion by the year 2054.
In a new budget outlook report, the non-partisan federal agency estimates that the United States’ GDP will reach $85.2 trillion in three decades, but that debt will be 166% of that, or $141.432 trillion.
The excessive debt could threaten the dollar’s role as the reserve currency, the CBO says.
“The likelihood of other adverse outcomes would also increase. For example, expectations of higher inflation could erode confidence in the U.S. dollar as the dominant international reserve currency.”
At time of publishing, the US national debt has reached $34.64 trillion.
The CBO forecasts that rapidly growing debt will eventually push up the cost of borrowing to the point where private investment will reduce, slowing economic growth and making the lives of American workers significantly worse.
“As a result, investment in capital used for the production of goods and services, such as housing and commercial structures, decreases. That reduction in private investment would slow economic growth.
Specifically, as investment in capital declined, workers would, on average, have fewer resources to do their jobs than they would if debt was smaller and capital investment was greater.
Consequently, they would be less productive, their compensation would be lower, and they would therefore be less inclined to work. Those effects would increase over time as federal borrowing grew.”
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