WASHINGTON — The amount of federal debt held by the public is projected later this year to surpass 70 percent of the nation's annual economic output, the nonpartisan Congressional Budget Office said Tuesday in a report.
Coming out of the Great Recession, the United States has recorded the largest budget deficits — in dollar terms and as a percent of the economy — since World War II, the CBO said.
Federal debt held by the public in 2008 stood at about 40 percent of the gross domestic product, the sum of all goods and services sold in the U.S. economy in a year. It's approaching twice that today, projected at 73 percent or higher, and the CBO suggested that both parties are to blame.
"The sharp rise in debt stems partly from lower tax revenues and higher federal spending caused by the severe economic downturn and from policies enacted during the past few years," the CBO said in its 2012 Long-Term Budget Outlook. "However, the growing debt also reflects an imbalance between spending and revenues that predated the recession."
The projections are a reminder about the difficult choices that must be made to set the nation on a sounder fiscal footing for the future. Later this year, Congress must decide whether to extend tax cuts that are set to expire and whether to let steep, automatic spending reductions take effect.
"The numbers are a little different than they were before, but it's the same story," said Roberton Williams, a former CBO economist who's a researcher at the Tax Policy Center, jointly run by the centrist Urban Institute and the center-left Brookings Institution. "The most important message is, putting it simply, you can't have your cake and eat it too. You can't have low taxes and high spending."
Debt held by the public stood at $10.9 trillion on Tuesday.
The White House suggested that the report is a call to action. "We know what we have to do. There has been a great deal of ink spilled on the various options available to us," spokesman Jay Carney said.