US federal debt at 200% of GDP by 2040 

(MENAFN) The Peter G. Peterson Foundation's latest report shows that by 2040, the US federal debt is forecasted to grow to 200 percent of the country's gross domestic product (GDP), reported Xinhua News.

The think tank revealed that the bipartisan agreement reached at the start of the month to prevent the "fiscal cliff" slightly enhanced the US federal government's budget outlook, however, it couldn't help much.

The report noted that after inking the fiscal cliff deal, the federal debt was expected to rise to 200 percent of GDP in 27 years, whereas before the agreement was signed, the debt was expected to reach the 200-percent level in 26 years, under current policies.

The report attributed the lower-than-expected improvement to spending on entitlement programs, including social security, that are still forecasted to increase faster than revenue.

However, the analysis report stressed that even though the deal didn't make significant progress toward the main goal of a sustainable fiscal policy, it contributed in avoiding several economically damaging effects that resulted from the combination of tax hikes and government spending reductions.