America’s public debt is projected to rise to record levels over the next three decades, according to a new Congressional Budget Office (CBO) analysis, which noted that the government’s finances have improved a bit thanks to the GOP-led debt ceiling deal but overall remain “challenging.”
The new forecast, released on Wednesday by the non-partisan spending scorekeeper, extends over a 30-year period the CBO’s earlier 10-year estimate of the effects of the debt ceiling legislation that President Joe Biden signed into law on June 3.
After crunching the numbers inside the debt limit agreement, called the Fiscal Responsibility Act (FRA), the CBO found that the act would reduce the cumulative deficit over the 10-year period until 2033 by about $1.5 trillion to $18.8 trillion.
That’s down from the previous projection of $20.3 trillion, with most of the decline stemming from the expectation that the FRA’s statutory caps will put a ceiling on discretionary funding in 2024 and 2025.
The CBO’s long-term projections, which extend the outlook from a 10-year to a 30-year period, describe the nation’s longer run finances as slightly better than before the FRA was passed, but still worrisome.
Federal debt is expected to rise in relation to gross domestic product (GDP), surpassing its historical high in 2029, when it reaches 107 percent of GDP. It then continues to climb, hitting 181 percent of GDP by 2053, per CBO.
“Such high and rising debt would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook,” CBO said in a statement, adding that so big of a debt burden “could also cause lawmakers to feel more constrained in their policy choices.”
The projections are based on various assumptions regarding the strength of the economy, the future path of interest rates, as well as labor market and demographic dynamics.
Red Flags
The CBO estimate indicates that federal spending as a percentage of GDP is expected to drop steadily from 24.2 percent in 2023 to 23.1 percent in 2026.
However, spending then starts to rise, reaching 29.1 percent of GDP in 2053. By comparison, the average outlays to GDP ratio between 1973 and 2022 was 21 percent.
One alarming finding in the report is that the inflation-driven high interest rate environment, along with persistently large primary deficits, are expected to cause debt-servicing interest costs relative to GDP to go up by nearly 300 percent over the next three decades.
However, the debt limit deal will result in a $188 billion decrease in net interest payments by 2033, beginning with a $1 billion drop in fiscal year 2024, according to CBO’s earlier impact assessment of the FRA.
Further, an aging population combined with growing health care costs boosts federal spending “significantly” on major health care programs and Social Security, the CBO said in the report.
Much like the spending projections, revenues are expected to fall from now until 2026, when some provisions from the Trump-era tax act are scheduled to expire.
The CBO report expects revenues to fall to 18.4 percent of GDP in 2023 and continue to decline until 17.8 percent in 2026. Revenues then gradually rise to 19.1 percent of GDP by 2053.
However, Republican leaders have said they hope to extend the 2017 tax cuts, which could squeeze what the CBO said in the more detailed version of its report (pdf) is a “significant source” of government revenue.
The CBO report warns that if the federal debt continues to rise in relation to GDP at the projected rate, there “would be an elevated risk of a fiscal crisis” in which investors lose confidence in the U.S. government’s ability to repay its debt and make interest payments. This, in turn, could cause interest rates to “increase abruptly, inflation to spiral upward, or other disruptions to occur,” CBO warned.
Other adverse effects would be possible too; like if expectations about the future rates of inflation push higher, the U.S. dollar’s role as the dominant international reserve currency could be undermined.
“Concerns about the government’s fiscal position could lead to a sudden and potentially spiraling increase in people’s expectations for inflation, a large drop in the value of the dollar, or a loss of confidence in the government’s ability or commitment to repay its debt in full, all of which would make a fiscal crisis more likely,” the report states.
There are other factors beside the amount of federal debt that feed into the risk of a fiscal crisis, and CBO said it’s unable to identify a tipping point at which the debt-to-GDP ratio would be so high that it makes a crisis likely or imminent.
However, it assessed the near-term risk of a fiscal crisis as low.
Meanwhile, the national debt surpassed $32 trillion for the first time in U.S. history when the Treasury Department released data on June 17—and the debt has gone up since.
Coffee the Christian way: Promised Grounds
The national debt as of June 27 stood at an all-time high of $32.18 trillion, according to the Treasury’s daily statement (pdf).
This represents about $25 trillion in debt held by the public, and about $7 trillion in intragovernmental debt (pdf).
One provision of the FRA suspends the debt ceiling for 19 months, which means the government can continue to borrow money until the end of 2024.
Article cross-posted from our premium news partners at The Epoch Times.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
