The Congressional Budget Office (CBO) released annual reports on the nation’s fiscal health. Unsurprisingly, it is a bad diagnosis.

According to the CBO, massive federal spending during Covid skyrocketed the debt to over $31 trillion. We owe an immense amount of money and are not generating enough revenue to pay our bills. In fact, we have not lived within our means for a long time.

For years, economists and some brave policymakers have warned Americans that our burgeoning debt will lead to terrible financial impacts if we don’t address the big drivers of debt, mandatory spending (or entitlements) along with discretionary spending.

Covid spending and inflation sparked by multi-trillion-dollar spending bills worsened our economic picture. The impact of inflation, spending, and debt is no longer theoretical. Expect to feel economic pain this year.  

Here are 5 takeaways from CBO reports on the economy’s outlook and debt:

1. The federal government overspent by $1.4 trillion this year alone. Over the next decade, that deficit will widen by $3 trillion due to the laws such as the falsely-named Inflation Reduction Act (the left’s climate change, tax, and health bill) and other measures.
2. Lawmakers maxed out our national “credit card” again. At the end of December 2021, Congress raised the debt limit by $2.5 trillion to $31.4 trillion. We reached that limit on January 19, 2023. The U.S. Treasury is enacting extraordinary measures to borrow additional funds. As of now, the government’s ability to borrow using extraordinary measures is expected to be exhausted between July and September 2023.
3. Expect 4 more years of high inflation. Tired of high prices on rent, groceries, clothing, services, and travel? Inflation is not projected to not return to the Federal Reserve’s 2% target rate until 2027.
4. The economy will stall in 2023. Economic growth is expected to come to a standstill during the second half of this year and grow by just 0.1 percent overall in 2023. This is due to declining home building and inventory investment in response to rising interest rates.
5. Millions of Americans will lose jobs. The unemployment rate is expected to rise from 3.6% in Q4 of 2022 to 5.1% by the end of 2023. Also, labor force participation will continue to fall, but within the next few years, the CBO believes workers who left the workforce during the pandemic will return.

The Wall Street Journal Editorial Board explains the relevance of all of this data on the debt to current spending debates in Washington:

CBO’s numbers are a useful reality check.

None of this is fiscal destiny, and we aren’t deficit doomsayers. Much depends on whether Congress can constrain the growth of spending now that Republicans control the House. The other key variable is economic growth, and on that score the CBO estimates aren’t hopeful. It predicts little growth this year, and a rebound only to 2.4% a year from 2024-2027. Growth falls to an anemic 1.8% after that.

Bottom Line

Policymakers on the left and right are responsible for racking up debt over generations. However, President Biden and congressional Democrats have surcharged deficits and the debt–despite claims otherwise–through reckless spending on bills ranging from the American Rescue Plan to the non-inflation-reducing Inflation Reduction Act. 

The federal “credit card” is maxed out. It’s time to stop splurging on borrowed funds and pay down what we owe.