If You Think the National Debt Is High Now, Just Wait

Off the Charts: The Visual Says It All

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On a chart comparing the U.S. national debt held by the public to gross domestic product (GDP), the massive borrowing from World War II looks like a tiny foothill compared to the Mount Everest of arrears that will pile up by 2051, a new report estimates.

Government spending to fight the pandemic and the associated economic recession, combined with decreased revenues because of the downturn, drove federal debt held by the public to what will be an estimated 102% of GDP by the end of 2021, the Congressional Budget Office (CBO) said in its annual 30-year outlook report. That’s approaching the record debt levels experienced during World War II and its immediate aftermath, when debt held by the public was 106% of GDP. 

But even that record high is nothing compared to what’s ahead, if current taxing and spending trends continue. While the debt-to-GDP ratio is likely to wane slightly immediately after the pandemic ends, it will bounce back quickly, surpassing its historical high by 2031 and going to the moon from there. 

How much of a problem this increasing debt presents depends on who you ask. “A growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar, making it more costly to finance public and private activity in international markets,” the CBO warns in its report.

Other economists say that the real danger is in the government spending too little—not too much—to fight the pandemic. Spending more on measures to fight COVID-19 would speed the economic recovery, according to economists at the Center on Budget and Policy Priorities, a progressive think tank. They argue that the national debt currently isn’t very burdensome, thanks to low interest rates, and that “concern about debt should not shortchange the nation’s efforts to fight the coronavirus, care for those harmed by it and by the sudden and deep recession, and restore the economy to health when the situation allows.” 

This chart only shows debt held by the public, not the gross national debt, which includes money that the government owes to itself. By that more inclusive measure, the debt-to-GDP ratio was already at 129% as of December.