To get us on a path that is declining in terms of debt as a share of gross domestic product requires a package of about $5 trillion total,” former Sen. Kent Conrad, D-N.D., told reporters during a Fix the Debt press briefing today at the National Press Club. “If you look at [the Congressional Budget Office’s] most recent numbers, that’s about the size of the package that we need, somewhere in about the $5 trillion range, to get this debt going down as a share of the economy. And we’re still going to have debt, at the end of this period, publicly held debt of 70 percent of GDP. That’s 100 percent of GDP as gross debt.”
Deficit hawks have reacted with alarm to the administration’s position. Since a calamitous recession hit in December 2007, the amount the government owes outside investors has more than doubled, soaring from about $5 trillion to more than $11.6 trillion. By the end of this year, the debt will top $12 trillion, according to new projections from the nonpartisan Congressional Budget Office — about 76 percent of the nation’s economy.
Cutting an additional $1.5 trillion would indeed stabilize the debt, leaving it growing at about the same rate as the broader economy for the rest of the decade, the CBO said. However, the debt would remain above 73 percent of gross domestic product — the highest level in U.S. history except for the period after World War II.
That’s much higher than the 62 percent target policymakers set three years ago when Obama appointed the Bowles-Simpson fiscal commission. And because policymakers have avoided changes to the big federal health and retirement programs, the debt would start rising again after 2023 as the bulk of the baby-boom generation retires.