If the country goes over the fiscal cliff, the debt ceiling may need to be raised by another $4.25 trillion over the next decade even though the federal government will take in a record amount of tax dollars.
This could explain why President Barack Obama wants unilateral power to raise the debt ceiling without getting approval from Congress.
The Congressional Budget Office (CBO) outlook for the next decade shows that tax revenues will “rise to a record level as a percentage of GDP," but annual federal spending will also increase by 55%. This will cause a massive increase in the deficit.
The CBO projections are based on the “current law," which assumes the Bush tax cuts will expire across the board in addition to sequestration cuts.
According to the CBO, federal tax revenue will "climb to 21.4 percent of GDP by the beginning of 2022," but the country's debt will not be reduced because the nation's spending will also balloon.
The economic outlook forecasts the federal government spent $3.563 trillion in 2012 and will spend $5.509 trillion in 2022, a 55% increase. The CBO projects this will increase the country's debt to $20.644 trillion, which is "$4.25 trillion beyond the current debt limit of $16.394 trillion."