By Michael O'Brien - 06/30/10 01:24 PM EDT
The national debt will reach 62 percent of gross domestic product (GDP) by the end of this year, the nonpartisan Congressional Budget Office (CBO) said Wednesday.
The budget office said the debt will reach its highest percentage of GDP since the end of World War II. The jump is driven by lower tax revenues and higher federal spending in the recent recession.
And while the national debt would stabilize at 67 percent of GDP over the next decade if current law were maintained, extending tax cuts enacted during the administration of President George W. Bush and keeping growth in appropriations in line with inflation would mean that the debt would reach almost 90 percent of GDP by 2020.
By contrast, GDP has averaged "a little above" 36 percent per year over the past 40 years.
The report comes as President Barack ObamaBarack ObamaWatch Obama's full correspondents' dinner speech Five ways Trump will attack Clinton Armstrong Williams: Obama 'should get on his knees and pray' MORE's fiscal commission meets again on Wednesday to work on crafting solutions to reining in deficits and the debt over time.
Obama got somewhat of a chilly reception from world leaders at the G-20 summit over the past weekend when he pressed them to continue with spending to bolster the global economy. Many nations in Europe and elsewhere have had to grapple with their own debt crises, and have been forced to enact tough austerity measures.
Republicans have been hammering away at the president and Democrats in Congress for their spending over the past year and a half, arguing that the stimulus act, healthcare reform law and other measures have done little more than exacerbate the nation's fiscal situation.
But the bigger long-term problem, according to CBO, remains Medicare.
CBO Director Douglas Elmendorf wrote in a blog post explaining the new report that under current laws, "federal spending on major mandatory healthcare programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter."
Keeping current policies in place would almost certainly force lawmakers to make steep spending cuts and raise taxes, Elmendorf argued, unless changes to address the problems were made sooner rather than later.
Cross-posted from Blog Briefing Room.