At a hearing Wednesday on the federal government’s deepening fiscal challenges, Senator Bob Corker questioned Congressional Budget Office (CBO) Director Keith Hall about the agency’s 2015 Long-Term Budget Outlook and the need for Congress to enact responsible policies to reduce the nation’s debt and deficits.
In the hearing, Senator Corker raised concerns about the country being unprepared for another financial crisis due to Congress’s inaction on real fiscal reforms.
He said, “It seems to me that our nation is much worse off than your projections are, that there are difficult decisions that are not being made, [and] the longer we put off those decisions the more difficult they become and the worse off our nation is…We have a lot of work to do.”
Affirming more needs to be done to prepare the country for a future financial downturn, Director Hall said, “I think all you need to do is look what happened to debt. It almost doubled since 2007, from that crisis, and now if we were to have another one with debt being as high as it is now, we would have real trouble responding to it.”
CBO’s 2015 Long-Term Budget Outlook report concluded:
· In 2007 debt as a percentage of GDP stood at 37 percent of GDP, below the 50-year average of 38 percent.
· Today’s debt to GDP ratio is 74 percent, which is twice as high as it was in 2007 and the highest it has been at any time since World War II.
· The nation’s cumulative deficits over the next 10 years alone are $7.4 trillion and the debt to GDP ratio is predicted to increase rapidly. Under the rosiest of current law predictions, it will rise to 78 percent by 2025 and 103 percent of GDP by 2040.