US needs $900B annually to restore pre-COVID debt: CBO
Return to pre-pandemic debt levels to require revenue increases, spending cuts totaling $900 billion per year for 25 years
Closing notification is seen on window of a Starbucks in New York, United States on May 29, 2018. American coffeehouse chain Starbucks will close more than 8,000 of its stores in the U.S. to conduct racial-bias education for its employees. ( Atılgan Özdil - Anadolu Agency )
ANKARA
If the US wants to restore the nation’s debt to pre-coronavirus levels, it will require spending cuts and revenue increases totaling around $900 billion annually for 25 years, the Congressional Budget Office (CBO) said in a report released Monday.
Based on its projections, the CBO found that if the US takes fiscal action starting in 2025, huge changes to spending and taxation would be required to stabilize the nation’s debt at the pre-pandemic level of 79% of gross domestic product (GDP) -- the total market value of all finished goods and services produced domestically by the country.
While reducing the federal debt increases the resources available for private investment in capital goods and services, lower deficits and debt would eventually reduce prices and interest rates, which would then increase the resources available for private investment, household consumption and exports, it said.
"If policymakers decided to reduce the deficit sooner rather than later, the benefits would include a smaller accumulated debt, smaller policy changes required to achieve long-term outcomes, and less uncertainty about the expected changes," the statement said.
The US national debt stood over $26.7 trillion as of 0540 GMT, while federal spending was at almost $6.2 trillion and the deficit at more than $3.1 trillion, according to usdebtclock.org.
