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Balance Owed: Federal Debt and Deficits

Progress Report and Scorecard

Authors: , Bernard L. Schwartz Senior Fellow, and Rebecca Strauss

Balance Owed: Federal Debt and Deficits - balance-owed-federal-debt-and-deficits-progress-report-and-scorecard  

Publisher Council on Foreign Relations Press

Release Date Updated January 2016

11 pages

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How America Stacks Up: Economic Competitiveness and U.S. Foreign Policy compiles all eight Progress Reports and Scorecards from CFR's Renewing America initiative in a single digital collection. Explore the book and download an enhanced ebook for your preferred device. 

The U.S. debt-to-GDP ratio has nearly grown to the Group of Seven (G7) average, a dramatic increase from 2000 when it was lower than most other G7 countries, according to this new progress report and scorecard from the Council on Foreign Relations Renewing America initiative. At its current rate, the U.S. debt-to-GDP ratio will be higher than all G7 countries except Japan by 2040.

While other large wealthy countries have been cutting their entitlement programs, the United States has left Medicare and Social Security mostly untouched. Recent U.S. budget cuts have instead focused on discretionary spending, which goes toward areas such as education, infrastructure, and research and development—all of which constitute investments in future economic growth.

Debt Scorecard"By 2040, public debt is projected to top 110 percent, equal to the highest levels reached during the Second World War," Renewing America Associate Director Rebecca Strauss writes. "And absent any policy changes it will likely keep climbing afterward into uncharted territory for the United States."

Americans will have to make difficult choices to get the public debt load under control. Sequestration, which took effect in 2013, only affected government spending projected to decline as a share of GDP. Meanwhile, U.S. policymakers left cutting entitlements or increasing tax revenues largely off the table, despite the fact that entitlements will account for nearly all new federal spending in the future.

"Just to slow debt growth to the rate of GDP growth (or a steady debt-to-GDP ratio) from today through 2040, changes to current policy would have to be dramatic: cut entitlements by 10 percent, cut discretionary spending by 24 percent, increase tax revenue by 6 percent, or some combination of the three," Strauss notes. "Adjustments to actually lower the debt-to-GDP ratio would be even more painful."

Read the Renewing America report and scorecard at cfr.org/balanceowed.

Read Strauss's op-ed on the report's findings on Qz.com.

This scorecard is part of CFR's Renewing America initiative, which generates innovative policy recommendations on revitalizing the U.S. economy and replenishing the sources of American power abroad. Scorecards provide analysis and infographics assessing policy developments and U.S. performance in such areas as infrastructure, education, international trade, and government deficits. The initiative is supported in part by a generous grant from the Bernard and Irene Schwartz Foundation.

Table of Contents

Click on a chapter title below to view and download each Progress Report and Scorecard.

More About This Publication

Edward Alden is the Bernard L. Schwartz senior fellow at the Council on Foreign Relations and director of the Renewing America initiative.

Rebecca Strauss is associate director for Renewing America publications.

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