US debt hits record high this decade, CBO warns

Federal debt as a percentage of the U.S. economy is on track to reach a record high by 2029 and will continue to rise over the next three decades, the nonpartisan Congressional Budget Office said Wednesday in a report outlining the country's long-term fiscal challenges. .

In its latest 30-year outlook, the budget office warned that rising debt would pose “significant risks” to the U.S. economic outlook in coming years, increasing interest payments to foreign bondholders and slowing economic growth. By 2054, the cost of interest on debt will double to 6.3 percent of gross domestic product, and spending on social welfare programs will account for more than half of the rest of the country's spending.

The report outlines the nation's long-term fiscal challenges at a time when the United States continues to borrow heavily to pay for increased federal spending as well as rising interest payments on its debt. The aging population is expected to further strain government coffers as more Americans become eligible for Social Security and Medicare in the years to come.

Debt as a percentage of gross domestic product is expected to reach a record high of 107% in 2029 and 166% in 2054.

The budget office also revised upward its growth outlook for the next three decades, based largely on growth in the size of the labor force due to increased immigration.

Long-term prospects can be difficult to predict, as geopolitical events and public health crises can cause dramatic fluctuations in spending and production. The CBO report assumes that the 2017 tax cuts, which are set to expire in 2025, will end at that time, resulting in savings for the government. However, many of these tax changes will most likely be prolonged and could worsen the federal deficit.

The CBO's projected deficits were lower than its forecast last June due to annual spending caps imposed by the Fiscal Responsibility Act of 2023. Lawmakers are working on a new $1 trillion spending bill that President Biden could soon sign that meets those limits.

Fiscal watchdogs continue to warn that lawmakers are neglecting a looming crisis by not more aggressively tackling the national debt.

“This is another reminder that politicians are putting political priorities ahead of the long-term health of the country,” Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, said in a statement.. “There is no way to look at these staggering numbers without realizing that we need to make a change.

Reducing deficits has proven to be a challenge for lawmakers in both parties, particularly because of resistance to restructuring welfare programs such as Social Security and Medicare.

The White House budget last week called for tax increases on corporations and the wealthy, which would reduce the deficit by $3 trillion over the next decade. Former President Donald J. Trump promised in 2016 to wipe out the national debt over eight years, but oversaw a widening budget deficit during his term and promised more tax cuts if re-elected.

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