Budget aficionados have long warned that the U.S. budget is on an unsustainable path. That’s old news (but important).
The new news, which I hope you’ve noticed, is that those warnings have become more urgent over the past year or so. Why? Because our future problems have moved much closer.
Over at the Committee for Economic Development, Joe Minarik has a nice chart that illustrates how rapidly the budget outlook deteriorated:
Joe’s chart shows two projections of the U.S. publicly-held debt. The blue line shows the history of the debt (measured relative to the size of the economy), as well as a projection of the future debt based on analyses by the Congressional Budget Office released in late 2007. The red line shows a similar projection, but based on CBO budget analyses released in January of this year.
As you can see, the day of debt reckoning has moved much closer. For example, our debt will hit 60% of GDP twelve years earlier than forecast (which Joe rounds down to a decade). And, of course, it will keep rising thereafter.
Bottom line: The warnings of budget experts have become much more urgent because our room for maneuver has gotten much smaller.