The CBO has a dire warning about the rapid rise in publicly-held federal debt, reported here by Gene Epstein:

Based on its “extended baseline” scenario, which assumes no change in laws, the CBO foresees the debt soaring above 100% by the late 2030s and rising rapidly from there. Based on its “extended alternative fiscal scenario,” which essentially consists of informed judgments on how the budgetary situation is likely to play out in the real world of politics, the agency’s projections are far more dire: The debt-to-GDP ratio would rise above 180% by the late 2030s and continue climbing from there.

Either way, in the CBO’s understated language, the “debt would be on an upward path, relative to the size of the economy, a trend that could not be sustained indefinitely.” That unsustainable upward path is fraught with risks. And while it is generally true that long-term forecasts are not worth betting on, this one is too plausible to ignore. The next dozen years will be the relative calm before the storm because the retiring baby boomers have yet to reach critical mass. This year, they will range in age from 50 to 68; 12 years from now, the range will be 62 to 80. Combine that with slow expansion of the working-age population, and the grim demographics are virtually baked in the cake.

Washington collected more in revenue that ever before last year, yet the deficit was nearly 50% bigger than George W. Bush’s worst non-TARP year. I don’t include TARP because that was a one-time expenditure, most of which has since been paid back, partly masking the true size of Obama’s first-term deficits. Bush’s worst non-TARP year was also the most expensive year of our wars in Afghanistan and Iraq — one of which is over, and the other is winding down.

So why the big deficits today? We’re expanding the welfare state (personal and corporate) on credit, which unlike spending on wars or TARP, never ends.

Well, right up until the financial collapse and/or hyperinflation.