The Concord Coalition said today that new 30-year projections by the Congressional Budget Office (CBO) demonstrate why Congress and the president should ensure that necessary near-term steps to support the economy in the face of the COVID-19 pandemic should not make the already daunting long-term outlook even worse. Concord issued the following statement from Executive Director Robert L Bixby:
“The unsustainable trend of our debt, and the reasons behind it, must not be forgotten in the din of political combat over the next COVID response legislation. Debt is now projected to double as a share of the economy by 2050 — from a level already approaching historic heights. It is imperative that recent and ongoing fiscal policy actions to quell the pandemic and rescue the economy do not worsen the structural deficiencies in the federal budget. An emergency response should not permanently widen the gap between spending and revenue. By their very nature, such policies should be timely, targeted and temporary.
Near-term policies that expand the debt on an emergency basis don’t need to be permanent to be effective.
The report also demonstrates that much lower projected interest rates on government debt can slow but not halt the unsustainable path we’re on. The constant accumulation of massive new debt on an annual basis, long after it may be needed as a COVID-19 response, would eventually overwhelm the effect of low interest rates.
As the economy slowly regains its footing, attention must focus on stabilizing the debt as a share of the economy. Ignoring our long-term structural fiscal and economic problems will not make them go away and will not build a political mandate for meaningful action. The longer we wait, the more difficult the solutions will be — and the greater the risks will be to the nation’s future. It may be many months before policymakers can turn their attention from fighting the pandemic to growing the economy but it is not too soon to begin thinking about what should be done when that time arrives.”