New budget projections show US has reached record debt level in 4 years: CBO

Non-partisan Congressional Budget Office The Central Bank of Oman released its latest 10-year budget and economic outlook on Friday that showed the federal government is on track to break a debt record set nearly 80 years ago.

CBO forecasts show that as a percentage of GDP, or compared to the size of the US economy, the… Federal debt The share held by the public is on track to rise from 98% of GDP at the end of FY2024 to 107% of GDP in FY2029.

At that point, public debt will not only exceed the size of the US economy, but also exceed the current debt record of 106% of GDP set in 1946, when the US began the post-war demobilization process. World War II. Growth is expected to continue in the future, reaching 118% of GDP in 2035.

“From 2025 to 2035, debt will rise as spending on Social Security, Medicare and interest payments outpace revenue growth,” Congressional Budget Office Director Philip Swagel told reporters.

The federal deficit continues to grow, and the Congressional Budget Office has solutions

The federal government is expected to manage $1.9 trillion Budget deficit In fiscal year 2025. The deficit is expected to decline briefly in the next two years before resuming projections rising to more than $2 trillion in fiscal year 2030 and reaching $2.7 trillion in fiscal year 2034.

The temporary decrease in the size of the deficit is due in part to the expected completion of parts of the 2017 budget. Tax deductions At the end of this year under current law causing tax revenues to rise. Although Congress and the incoming Trump administration may enact new legislation to extend these provisions.

The Congressional Budget Office’s analysis is based on current law, so changes in federal tax and spending policies could change these numbers.

What is the largest budget deficit in US history?

Much of the growth in the deficit is due to… Increase spending on entitlement programs such as Social Security and Medicare as America’s population continues to age and the costs of servicing the national debt increase during a period of rising interest rates.

Spending on Social security It is expected to rise from $1.5 trillion in fiscal year 2025 to $2.6 trillion in fiscal year 2035, while health care spending is expected to grow from $942 billion to $1.7 trillion in that period. The cost of paying interest on the national debt rises from an expected $952 billion this fiscal year to more than $1.7 trillion a decade from now.

Swagel also noted that Social Security’s Old-Age and Survivors’ Insurance Trust Fund is expected to be exhausted in 2033, the same year the most recent Congressional Budget Office analysis predicted last June.

When that trust fund is exhausted, Social Security beneficiaries, by law, would see their benefits automatically reduced to match payroll tax revenue, which an analysis by the nonpartisan Committee for a Responsible Federal Budget (CRFB) found would result in 21% reduction in social security benefits.

The US national debt reaches a new record: $36 trillion

“A financially weak country cannot remain a strong country for long,” CRFB President Maya McGuinius said in a statement. “The United States has built a dangerous mountain of debt simply because our political leaders are unwilling to do the hard work of governing responsibly and serving as fiscal stewards of the country.

“They have chosen to borrow at record levels rather than acknowledge that part of the budget is to have a plan to pay the bills, despite the enormous damage they continue to do to the country as the debt grows,” she added. “As today’s report shows, our debt has reached near-record levels not seen until just after World War II, and we will spend more on interest than any program other than Social Security and Social Security will in less than a decade.”

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“By any definition, we are on an unsustainable fiscal path,” said Michael Peterson, CEO of the nonpartisan Peter G. Peterson Foundation. “We are currently on track to add $22 trillion to our national debt over the next 10 years, including $14 trillion.” Spending on interest costs alone within ten years, our debt will grow to a staggering 118% of our entire economy.

“Today’s report shows dire predictions, but the good news is that there are many policy solutions available to address the financial challenges we face,” Peterson added. “As we approach Inauguration Day, our leaders have a new opportunity to secure America’s economic future by setting us on a stronger, more sustainable fiscal path.”