In testimony today before the House Financial Services Committee about the federal debt, CBPP Senior Fellow Jared Bernstein concluded with two important points about long-term debt:
First, it is clear that our long-term debt picture has very significantly improved. . . . [C]onsiderable deficit savings have been legislated since 2010. Also, one of the main factors driving the long-term debt is the intersection of our aging demographics and the growth of health care costs. However, in recent years, those costs have slowed significantly, thanks in part to the types of measures introduced in the Affordable Care Act, and that too has lowered our debt projections (see chart). . . .
The second point of the figure, however, is that while our debt forecasts are improved, they still reveal significant pressures, with debt projected to exceed 100 percent of [gross domestic product] before 2040. This projection strongly supports the need to continue to implement the efficiency enhancing measures in the ACA, to continue to monitor and build on the recent progress we’ve seen on health care costs, and the pursuit of balanced fiscal measures like those in the President’s new budget.