Sunday, June 30, 2019

Health Care

If the US continues today’s patterns of taxes and spending, the national debt will almost triple as a share of the total economy by mid-century. And, according to a new report by the Congressional Budget Office, the 2049 debt as a share of Gross Domestic Product (GDP) will be twice the size of the overall economy—vastly larger than ever before in US history.

In the unlikely event that Congress shows some fiscal restraint and allows the individual income tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA) to expire at the end of 2025, and significantly limits growth in military and domestic discretionary spending, the national debt still will explode but with somewhat less force. By 2049, the debt as a share of the economy still would exceed the levels of World War II.
Even in that relatively positive scenario, which is CBO’s basic assumption, the story gets worse. By 2049, the government would spend 20 percent of its budget on interest on the debt. Except for health care and Social Security, interest payments would be the largest federal expenditure. In effect, the government would be spending more than three-quarters of its budget on payments to retirees, health care providers, and bondholders.

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