The “2015 Long-Term Budget Outlook”, as published this month by the Congressional Budget Office (CBO), has reported that deficits (publicly-held federal debts) have not been higher since World War II. Currently, they are equal to 74% of our Gross Domestic Product (GDP). That, unfortunately, is not the end of the story. The CBO predicts this figure to be between 103-107% by 2040 as interest rates on the amount of debt will rise. The only way to solve this issue is a big increase in revenues (remember, the U.S. economy contracted in the first quarter of 2015) or a big reduction in spending.
Both of these look unlikely at the moment, especially spending cuts. A quarter of a million Americans turn 65 every single month, and Medicare and Medicaid, two of the U.S.’s larger federal programs, will be looking for continuing increases in their huge budgets, year-on-year.
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