The Lost Budget Decade

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.

About Donald Marron 294 Articles

Donald Marron is an economist in the Washington, DC area. He currently speaks, writes, and consults about economic, budget, and financial issues.

From 2002 to early 2009, he served in various senior positions in the White House and Congress including: * Member of the President’s Council of Economic Advisers (CEA) * Acting Director of the Congressional Budget Office (CBO) * Executive Director of Congress’s Joint Economic Committee (JEC)

Before his government service, Donald had a varied career as a professor, consultant, and entrepreneur. In the mid-1990s, he taught economics and finance at the University of Chicago Graduate School of Business. He then spent about a year-and-a-half managing large antitrust cases (e.g., Pepsi vs. Coke) at Charles River Associates in Washington, DC. After that, he took the plunge into the world of new ventures, serving as Chief Financial Officer of a health care software start-up in Austin, TX. After that fascinating experience, he started his career in public service.

Donald received his Ph.D. in Economics from the Massachusetts Institute of Technology and his B.A. in Mathematics a couple miles down the road at Harvard.

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