CBO: U.S. debt could be double GDP by 2037

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WASHINGTON, June 5 (UPI) -- The Congressional Budget Office said the federal debt could be twice the size of the U.S. gross domestic product by 2037 without monetary policy change.

The CBO said an extension of tax cuts enacted during the administration of former President George W. Bush and current Medicare spending without monetary policy change would put the debt at 200 percent of GDP in 25 years, The Hill newspaper reported Tuesday.

Under those conditions, the debt would exceed the GDP by 9 percent in 14 years, the CBO warned.

Congress can alter the outcome considerably by allowing the Bush era tax rates to expire in January and by holding the line in Medicare spending, the CBO said.

Federal debt would drop from 73 percent of the GDP this year to 61 percent, and would reach 53 percent of GDP, instead of 200 percent, by 2037, the CBO concluded.

"The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course," the CBO report said.