by James Carter
CBO Director Phill Swagel’s recent testimony about the federal budget’s “worrisome trajectory” was reminiscent of New Jersey Governor Richard Codey’s quip: “The good news is, we’re not bankrupt. The bad news is, we’re close.”
But how close is close?
A Little History
For more than fifty years, from 1957 to 2008, the publicly-held federal debt never exceeded 47.9 percent of gross domestic product. Analysts projected a large and sustained increase in the debt relative to GDP, but lawmakers were comforted by the knowledge that the day of reckoning wouldn’t occur for years. Then came the Great Recession.