美国国会预算办公室（Congressional Budget Office）最近公布了新的预算估算报告。这份报告已经让评论人士迎来了一系列感觉良好的时刻。他们表示，债务已经得到控制。他们指出，联邦医疗保险（Medicare）的预期成本将继续下降。他们还宣称，根据国会预算办公室的估算，未来的利率水平也将下降，利息支出因而将减少。在一片欢呼雀跃声中，值得指出的是，有两个事实可能会延缓他们宣布赢得这场赤字战争“胜利”的时间。
The Congressional Budget Office recently put out new budget projections and commentators have had a series of feel-good moments about it. Debt is under control, they say. Projections of Medicare costs continue to fall, they point out. The CBO’s estimates of future interest rates, and hence interest payments, have come down as well, they echo. Amidst all of the congratulations, it is worth pointing out two facts that might give one pause in claiming “victory” in the deficit wars.
First, the overall debt level is already high relative to historical norms. At its current level of 74%, the ratio of federal debt-to-GDP is at its highest ever, except for seven years around World War II. At that time, the debt ratio peaked at 106% at the end of the war and then fell rapidly, due to low interest rates, inflation, and a generation’s worth of strong economic growth that we can only hope to see again anytime soon.
Now, however, the debt-to-GDP ratio is not projected to fall. It is projected to creep up slowly over the next decade and then more rapidly in the future. It used to be the case that people worried about whether the debt would increase to high levels – like 74% of GDP. Now, we have arrived there. Before the Great Recession, even with the major tax cuts, new entitlements, increased domestic spending and the expanded military operations of the Bush administration, the debt-to-GDP ratio was just half as big as it is now.
It is interesting that many people who thought former U.S. president George W. Bush’s agenda was unaffordable back when the debt-to-GDP ratio was half as big as it is now feel that a ratio of 74% is nothing to worry about as debt is predicted to rise further.
But higher deficits, as the CBO reminds us, will crowd out investment, reduce economic growth and reduce the increase in living standards for the population as a whole. More generally, if sustaining a high debt-to-GDP ratio were politically and economically costless, one would have seen many more countries, before the Great Recession, in high net debt territory. After all, countries could spend more and cut taxes with impunity if the debt-to-GDP ratio didn’t matter. In fact, very few were above 70 percent. It is not a good place to be historically nor comparatively.
Second, the current projections of the deficit could prompt unwarranted complacency because they reflect both an improving economy and underlying spending and revenue trends. The figure below shows the CBO’s baseline projection that deficits are basically flat at just under 3% of GDP over the next five years, then rise slightly.