The Congressional Budget Office predicted Tuesday that federal debt held by the public will grow to a record 107% of gross domestic product by 2029 and soar to 181% by 2053—a debt burden that would far exceed all previously recorded levels.
The Congressional Budget Office projected federal debt deficit will increase “significantly” in ... [+]
The projections, which are dependent on current laws remaining generally unchanged over the next 30 years, say that debt held by the public will equate to 98% of GDP by the end of this year, a ratio that will nearly double in the next 30 years.
The CBO warns that if such debt materialized, economic growth would slow, interest payments to foreign investors would increase and that threats to the fiscal and economic outlook could develop.
The 2053 projection is on track to rise higher still, according to the CBO, which specifically cited rising interest and borrowing rates, eroded confidence in the U.S. dollar and inflationary pressure as potential consequences of rising federal debt.
The projected 181% debt in relation to the GDP is slightly less than the 185% projected by the CBO last year for 2052.
The ratio of debt to GDP hit a record shortly after World War II, climbing to 106% of GDP in 1946. The only other moment in U.S. history to provoke numbers close to that figure was the Covid-19 pandemic, which led to around a 100% debt-to-GDP ratio when federal spending spiked due to numerous programs to aid American businesses and people. The CBO added that deficits are expected to keep growing over the next few decades as spending rises and tax revenue fails to keep up, especially as an aging population drives up Social Security and healthcare costs and the federal government spends more money paying interest on its debt.
The CBO noted in its budget outlook that budgetary outcomes are hard to predict, especially over a long period of time. Even if federal laws stayed in place, the officer’s projections “would be subject to considerable uncertainty.”
The CBO outlook also predicts deficits will average 7.3% of GDP in the next 30 years—more than double their average in the last 50 years. By 2053, deficits are projected to reach 10% of GDP—a number so large that it has only been reached during World War II and the Covid-19 pandemic.
The 2023 Long-Term Budget Outlook (Congressional Budget Office)