The rapidly rising federal debt will cause substantially more damage to the U.S. economy in coming years than climate change, said the Congressional Budget Office, putting stark figures on the scope of the danger.
The CBO said Friday that projected federal debt growth would reduce the economy by 3.2% in 30 years and climate change would sap it by 1%, as measured by gross domestic product.
The CBO released the data in response to a question from Sen. Charles E. Grassley of Iowa, the top Republican on the Senate Budget Committee. Mr. Grassley labeled climate change a “serious issue” but said it was odd that the Democratic-led panel was putting so much emphasis on it.
“CBO’s nonpartisan, fact-based analysis ought to put a reality check on Budget Democrats’ climate-centered agenda. It’s high time the Budget Committee focused on the budget,” Mr. Grassley said after the data was released.
The federal debt topped $35 trillion late last month.
Of that, roughly $28 trillion is held by public investors. The rest is internal government debt, such as IOUs from one program to another.
The problem with debt is that it crowds out other investments and ties up a significant amount of the federal budget in interest payments instead of productive spending on programs such as transportation infrastructure or power.
“As federal borrowing increased, the amount of funds available for private investment would decline (a phenomenon known as crowding out), and interest costs would increase,” the CBO said in its answers to Mr. Grassley. “Perpetually rising debt would also increase the likelihood of a fiscal crisis and pose other risks to the U.S. economy.”
Climate change is expected to affect agricultural productivity and increase the overall costs of recovering from an anticipated increase in major hurricanes and damage from more frequent storm surges.
The Washington Times contacted the office of Sen. Sheldon Whitehouse, Rhode Island Democrat and chairman of the Budget Committee, for this report.
The CBO’s calculations compare the current level of public debt, which is equal to 99% of GDP, with the projected level in 2054, three decades from now. That is the end of the CBO’s long-term budget window.
The CBO said quick action in Congress would make the debt more manageable, particularly if it involves cutting spending for Medicare, Medicaid and Social Security.
The agency said it cannot estimate the point where the debt grows so high that the U.S. would risk a default.
“In CBO’s assessment, the trajectory of deficits and debt under current law is unsustainable. Although there is no identifiable tipping point at which a fiscal crisis would be inevitable, the large and growing amount of debt increases the risk of such a crisis,” the agency said.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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