The 2014 Long-Term Budget Outlook

Chairman Ryan, Congressman Van Hollen, and Members of the Committee, thank you for the opportunity to testify on the Congressional Budget Office s CBO s most recent analysis of the outlook for the federal budget over the long term. My statement today summarizes The 2014 Long-Term Budget Outlook, which was released yesterday. Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing its debt to soar. The total amount of federal debt held by the public is now equivalent to about 74 percent of the economy s annual output, or gross domestic product GDP a higher percentage than at any point in U.S. history except a brief period around World War II and almost twice the percentage at the end of 2008. If current laws remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits would push debt back to and above its current high level. Twenty-five years from now, in 2039, federal debt held by the public would exceed 100 percent of GDP, CBO projects. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.