The U.S. is on a path to nearly double federal debt over the next decade, the Congressional Budget Office said on Wednesday.
The nonpartisan office updated its Budget and Economic Outlook for the decade ahead, projecting that the federal budget deficit will average around $2 trillion each year over the next 10 years. By 2033, the total debt of the federal government held by the public will rise by $22.1 trillion from $24.3 trillion last year to $46.4 trillion, according to the CBO.
“The deficit amounts to 5.3 percent of gross domestic product (GDP) in 2023, swells to 6.1 percent of GDP in 2024 and 2025, and then declines in the two years that follow. After 2027, deficits increase again, reaching 6.9 percent of GDP in 2033—a level exceeded only five times since 1946,” the CBO said in the report.
This year the deficit is expected to be $1.4 trillion. In 2033, the CBO projects a $2.7 trillion budget deficit.
“The debt trajectory is unsustainable,” CBO director Phillip Swagel told journalists at a press conference after the report’s afternoon release, according to the Associated Press. The CBO can’t tell Congress what to do, he said, “but at some point, something has to give — whether it’s on spending or revenue.”
In CBO’s projections, we are embarking on a new era of big government spending and taxes. Spending and revenues measured as a percentage of GDP equal or exceed their 50-year averages through 2033. Spending increases from 23.7 percent of GDP this year, a high level by historical standards, to 24.9 percent in 2033. According to the CBO, this increase is driven largely by rising interest costs and greater spending on programs the provide benefits to elderly people.
The CBO sees revenues amounting to 18.3 percent of GDP in 2023. The office projects that they will decline over the next two years before increasing after 2025, when certain provisions of the 2017 Trump tax reforms are set to expire. Revenues are then seen as roughly stable after 2027, totaling 18.1 percent of GDP in 2033.
The federal government’s debt is projected to rise in relation to the size of the economy each year, reaching 118 percent of GDP by 2033—which would be the highest level ever recorded. The CBO pointedc out that debt would continue to grow in the years that follow if current laws generally remained unchanged.
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