CBO Warns Of Fiscal Catastrophe As A Result Of Exponential Debt Growth In The U.S.

Tyler Durden's picture

In a just released report from the CBO looking at the long-term US budget outlook, the budget office forecasts that both government debt and deficits are expected to soar in the coming 30 years, with debt/GDP expected to hit 150% by 2047 if the current government spending picture remains unchanged.

The CBO's revision from the last, 2016 projection, shows a marked deterioration in both total debt and budget deficits, with the former increasing by 5% to 146%, while the latter rising by almost 1% from 8.8% of GDP to 9.6% by 2017.

According to the CBO, "at 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047."

In addition to the booming debts, the office expects the deficit to more than triple from the projected 2.9% of GDP in 2017 to 9.8% in 2047. The deficit at the end of fiscal year 2016 stood at $587 billion.

A comaprison of government spending and revenues in 2017 vs 2047 shows the following picture:

The CBO also mentions rising rates as another key reason for the increasing debt burden. The Federal Reserve has kept rates low since the financial crisis but is on track to gradually hike rates in the coming year.

On the growth side, the CBO expects 2% or less GDP growth over the next three decades, far below the number proposed by the Trump administration.

The budget office breaks down the primary causes of projected growth in US spending as follows: not surprisingly, it is all about unsustainable social security and health care program outlays.

The CBO's troubling conclusion:

Greater Chance of a Fiscal Crisis. A large and continuously growing federal debt would increase the chance of a fiscal crisis in the United States. Specifically, investors might become less willing to finance federal borrowing unless they were compensated with high returns. If so, interest rates on federal debt would rise abruptly, dramatically increasing the cost of government borrowing. That increase would reduce the market value of outstanding government securities, and investors could lose money. The resulting losses for mutual funds, pension funds, insurance companies, banks, and other holders of government debt might be large enough to cause some financial institutions to fail, creating a fiscal crisis. An additional result would be a higher cost for private-sector borrowing because uncertainty about the government’s responses could reduce confidence in the viability of private-sector enterprises.


It is impossible for anyone to accurately predict whether or when such a fiscal crisis might occur in the United States. In particular, the debt-to-GDP ratio has no identifiable tipping point to indicate that a crisis is likely or imminent. All else being equal, however, the larger a government’s debt, the greater the risk of a fiscal crisis.


The likelihood of such a crisis also depends on conditions in the economy. If investors expect continued growth, they are generally less concerned about the government’s debt burden. Conversely, substantial debt can reinforce more generalized concern about an economy. Thus, fiscal crises around the world often have begun during recessions and, in turn, have exacerbated them.


If a fiscal crisis occurred in the United States, policymakers would have only limited—and unattractive—options for responding. The government would need to undertake some combination of three approaches: restructure the debt (that is, seek to modify the contractual terms of existing obligations), use monetary policy to raise inflation above expectations, or adopt large and abrupt spending cuts or tax increases.

Then again, as the past 8 years have shown, only debt cures more debt, so expect nothing to change.

Also, we find it just a little confusing why the CBO never warned of an imminent "fiscal crisis" over the past 8 years when total US debt doubled, increasing by $10 trillion under the previous administration.

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Joe Cool's picture

This is new!  We have a debt problem?  Glad somebody told me....

NugginFuts's picture

I say who cares. We'll all be dead by then anyway, thanks to RyanCare's magic cyanide capsule treatments.

Joe Cool's picture

Critical thinking is priceless...But it does upset me at times...Should have taken the Blue Pill

Hal n back's picture

Cbo goes from unsustainable path to catastrophy.

economessed's picture

What I want to know is why do they write reports that NOBODY IN  THE FEDERAL GOVERNMENT IS EVER GOING TO READ.  Writing a report that foreshadows the inevitable collapse of the government, its currency, and many social institutions and providing it to congress is the intellectual equivalent of saying "ummm, your fly is open..."

bwh1214's picture

There will be a critical mass default at some point and the fallout will be unstoppable. 

Croesus's picture



Buh, buh buh...Holohoax! 6 Bazillion Jews died...that makes things like this okay: 




WayPastCaring's picture

Yet another in a billion similar articles posted non-stop at ZeroHedge, in which we learn absolutely nothing new. I accept we're screwed but why should I waste time reading the same fucking shit over and over and over again?

Here's a suggestion for ZH: why not just post this every day and be done with it? ...

headline: America is DOOMED

body: If you don't already know why, you're a fucking moron. Thank you for clicking.

post-script: Buy gold and silver and guns and ammo and store water and freeze-dried food and crawl into a hole in the woods. You're welcome.


Haus-Targaryen's picture

I love all these 30 year charts that anticipate a never-ending bull market. 

Too often when discussing debt/GDP we only focus on nominator, and completely ignore the denominator. 

Wait till debt explodes while GDP collapses into itself. 

THAT will be one helluva chart. 

Pinto Currency's picture

The issue is the $63.5T total owed by all sectors (private and public) in the US.


The Federal Reserve has destroyed the US economy.

Hopeless for Change's picture

I had to double-check the date on this article to make sure it wasn't from 2009.  


What a "bombshell".

lexxus's picture

Still, catastrophe is not a strong word. CATACLYSM is better.


techies-r-us's picture
techies-r-us (not verified) stizazz Mar 30, 2017 11:12 AM

I've retired South of the border. Can't wait to see you all trying to scale Trump's wall to come down here.

Pinto Currency's picture

Have a look at this.
What the Federal Reserve has done is criminal:


bob_bichen's picture
bob_bichen (not verified) lexxus Mar 30, 2017 6:09 PM

RE:  Spammer lexxus (above), Mano-a-Mano, Kavlar, techies-r-us, stizazz (the same person):

You have NO IDEA how troubled this individual, the Spammer With One Hundred Log-ons, really is.  He has trolled and spammed his website crap on here forever, always with the same macabre conversations with a long series of "imaginary playmates." It really is quite perverse and whoever "he" is, he seems to really get his rocks off voting himself up arrows and replying to his own comments, and also appears to have no life beyond making off-topic comments with his link to the SPAM-, TROJAN-, VIRUS-INFESTED  "biblicisminstitute,wordpress,com"

He shares this pathology with TrollAndDump (formerly known as XYTHRAS - since banned) whose "dailywesterner,com" is, if anything WORSE than the biblicism fetishist, also SPAM-, TROJAN-, VIRUS-INFESTED.

Other ZHers  may wish to take one minute to send an email to abuse@zerohedge.com requesting that all of the "imaginary friends" (in the list below; copy and paste)   be permanently banned for spamming.

As you do that, use your imagination to try to conceive of what type of whackadoo would spend their life in pajamas, eating stale chips and drinking cheap soda from the dollar store, popping zits, and spamming zerohedge. 

Many of the following have been banned but, like crabs and cockroaches, they just seem to come back.  The "short list of imaginary playmates" includes:







Aristotle of Greece





Yippee Kiyay


SumTing Wong

King Tut



Holy hand grenade of Antioch,

etc. etc. etc.

Sick Underbelly's picture

And to think...those who work and pay taxes are FUNDING these types of "products", which, if you pay attention, will NOT be discussed or dwelled upon by our oath-swearing members of Congress.

The breeze will make a bigger sound.

Sudden Debt's picture

And it's there that lies the bullshit of this article!!



NOT 20 YEARS!!!!!

NotApplicable's picture

So... what you're saying is that Janet needs to increase the balance sheet by another $55T and it's all good?

Pinto Currency's picture

The debt needs to be written-down before there's a bond market collapse / financial system chaos.

BennyBoy's picture


Let the financial fuckers fail then put them in jail according to the law.

That's law enforcement I can support.

Bobbyrib's picture

The smart countries decrease their debt. The dumber countries elect bullshitters who run on decreasing the debt while expanding it. I hope I can GTFO ASAP.

JRobby's picture

Let them fail

I thought they were "swapped out to beyond the reach of the universe" to protect "the bank"?????

Or do they buy those things for speculation and profit instead of portfolio insurance?

gatorengineer's picture

Bull Markets end?  Since when?

Giant Meteor's picture

Well you do have a point. My first reaction was ,, nooooooo, you don't say .. color me surprised. Hell, one good thing, it saves time and you can jump right to the comment section and crack wise. Post early and post often, you know, to register surprise ..

I'm afraid we'll just have to wait this thing out patiently, take steps on a personal level, invest in your personal tribe, and community to circle the wagons wherever you may find yourself ..

I do believe that many folks read the comments here, particularly the "national security state." What that means exactly, is anyone's guess. It's probably nothing ..

Still, it does peak the ole imagination, wondering which butterfly flapping it's wings, in some remote corner, will start the cascade. I mean part of the "conditoining" is the constant beratement and of course repetition, of the various memes. which in the grander scheme of things, doesn't mean shit.

The old rules, while not as firmly in place as once thought, fraying etc. are still very much in place, and are best summed up by Orwell's vision, as well as Huxley's ... a melding of deep state oppression, and a thouroughly drugged up, dumbed down culture that seems immobilized to do anything about it, some perhaps, welcoming it ..

It is after all the product of many years of conditioning and complacency, and of course being thouroughly conned at every fucking turn and corner. It is said that "hope" is the weak sister of faith ..

All ye who enter here, abandon all hope ..

My faith is not in government, nor in politicians ... (paid and corrupt mouthpieces) who make regular habit forever of pissing down my back and tell me it's rainin .. Certainly not faith in the empiracle goodness of mankind ..

The good news is, the script has been blown, so we patiently await the butterfly (or black swan) to flap it's wings ,, to start the next great show, that never ends ..

World WITHOUT end,

Amen ..

CheapBastard's picture

Well, at least we have had 8 years of a "robust recovery" according to Soweeto bin Bama, and everyone got to "keep their doctor and health isnurance."


That's something.

JRobby's picture

In an actual universe, Obama would be tried soon. We live in some sort of distorted universe.

JamesBond's picture

2010: Joint Chiefs of Staff Chairman Adm. Michael Mullen,
"Debt is top national security threat."


Sick Underbelly's picture

WHEN?   Where are the pretty graphs and historical trend analysis to support it?   Specificity in your tool chest?

AGuy's picture

It was the Russians! It was the Russians that stole trillions! /sarc

Don't you know that the Russians are to blame for every damn problem in the USA, from Baldness to obesity.

Sages wife's picture

GOD I LOVE DOOM PORN! Can't resist; keep it coming! This article made my day. I'm cracking up.

Donald J. Trump's picture

Good for record keeping.  When our civilzation is discovered after it has been long dead and forgotten, the new pioneers wil be able to look at it and wonder wtf we were thinking.

booboo's picture

On average the CBO is off by 40% on their projections so there is that.

JRobby's picture

They hire the best and brightest economists, analysts and mathmeticians according to them.

GUS100CORRINA's picture

CBO Warns Of Fiscal Catastrophe As A Result Of Exponential Debt Growth In The U.S.

DEBT has been hanging over the markets, institutions and governments like a sword of damocles for sometime now.

So when is it going to fall .., next week, next month or next year?

Inquiring minds want to know so we can profit from it.

LawsofPhysics's picture

Yes, Japan has been wondering about this for some 30+ years...

Bottom line, none of these bullshit financial/paper/digital claims mean shit until they actually start seeking out real assets...

same as it ever was, for now...

Ghost of Porky's picture

So break some windows you stupid shits.

Antifaschistische's picture

Let me see if I understand this...

The CBO, has now decided, that if we keep borrowing $1,000,000,000,000 per/year....we will be in trouble by 2047.

WOW!!!  How many PhD's in Math and supercomputers does it take to do that calculation?

Donald J. Trump's picture

For the last 8 years math was done by unicorns.

August's picture

For the last 8 years, math was done by those seeking the transformation of America.

For the previous 8 years, math was done by Cheney and Rumsfeld.

Nuke the entire site from orbit.  At least twice....

cornedmutton's picture

It's the only way to be sure.

shocktherapy's picture
2015-06-04 07:00 by Karl Denninger
If You're Older Than 40 And Reading This...* http://market-ticker.org/akcs-www?singlepost=3380063 But I do know the math tells me a meltdown at a scale four to five times greater than any we've seen in this nation's economic history, including 1929 and 2008, is inevitable unless we stop this and with every day that passes the amount of accumulated damage that there is no way to evade grows at an ever-increasing, indeed exponential, rate.
Sweet Chicken's picture

The light at the end of the tunnel is just a freight train heading our way

business as stusual's picture

Apparently you are not paying attention, "collapse happens slowly then all at once." We have been slowly collapsing since 1971. Now we are about to transition into "all at once". If you are really paying attention, this should be glaringly obvious. The real shit show is just now ramping up, the next 8 months are going to seperate the wheat from the chaff.

consider me gone's picture

You and me both. I wish my deepest thoughts were fantasy football and what kind of grill I should buy. I'm jealous of the idiots.

U4 eee aaa's picture

You still need to get through the nursing home torture chamber with your disgruntled kids and grandkids wanting their pound of flesh for the money you spent