The Long-Run Fiscal Outlook in the United States

Meisenbacher, Brigid C.; Wilson, Daniel J.

Journal Article

The Long-Run Fiscal Outlook in the United States

Abstract: The federal debt as a share of U.S. GDP is nearing its historical high from World War II. This ratio fell sharply over the three decades after World War II due to a primary surplus, rapid economic growth, and low interest rates. Projections for the coming three decades point to a persistent primary deficit without major reforms to mandatory spending programs or higher taxes. Thus, the rates of interest and economic growth will be crucial for determining the long-run debt-to-GDP ratio’s evolution.

Keywords: federal debt; GDP; interest; economic growth; debt-to-GDP ratio;