CBO finds federal debt to rise to 115 percent of GDP in next decade
The Congressional Budget Office (CBO) projects federal debt held by the public will equal 115 percent of GDP in the next 10 years, as Washington struggles to find bipartisan solutions to tackle the nation’s deficits.
The CBO said Wednesday that the federal debt held by the public would reach 98 percent of GDP by the end of the year, and is on track to meet a historic high of 107 percent of GDP in 2029. Within less than three decades later, that number is expected to reach 181 percent.
“Measured as a percentage of GDP, federal debt is now projected to be 2 percentage points higher in 2023 and 9 percentage points lower in 2052 than it was in last year’s report,” the CBO said. “Overall, CBO’s projections of debt have increased through 2042 and decreased in later years.”
The office noted in the report that its budget projections also differ from those released in February 2023, under which the federal debt held by the public would reach 195 percent of GDP in 2053. The office said the previous projections were “constructed using a simplified approach to project spending,” while also noting estimated effects of the Fiscal Responsibility Act (FRA) of 2023.
Congress passed the FRA weeks ago as a part of a deal struck between President Biden and Speaker Kevin McCarthy (R-Calif.) to raise the debt limit, but not without a host of proposals aimed at curbing spending to buy necessary GOP support.
The CBO estimated earlier this year that the bill would trim deficits by about $1.5 trillion over the next decade. For context, the Treasury’s Debt to the Penny data set shows the national debt stood at around $32.2 trillion Wednesday.
Shortly after the CBO’s report dropped Tuesday, Republicans on the House Budget Committee highlighted the agency’s reduction of its projection of “2053 debt by $10 trillion or 14 percent of GDP” since the bill’s enactment, but raised alarm over long-term projections on the “nation’s dismal fiscal health.”
Budget hawks also say much more work is needed.
While Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said long-term projections “show that we have made some recent progress,” she said the FRA “can only be the start of our efforts to get the debt under control.”
“The FRA didn’t address health care, Social Security, or tax revenue. There is no way to put our debt on a sustainable course without looking at these three parts of the budget,” she said.
“Politicians also need to stop taking pledges that make solutions harder, including pledges that impede efforts to cut costly tax breaks, lower health care costs, raise new revenue, or save Social Security from insolvency,” she said.
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