Federal budget deficits in the United States will more than triple over the next three decades, leading to a record level of publicly held debt by 2047, the nonpartisan Congressional Budget Office (CBO) projected Thursday.
Budget deficits — the differences between U.S. yearly revenues and expenditures — are set to increase from 2.9 percent to 9.8 percent by 2047, skyrocketing the federal debt from 77 to 150 percent of the country’s GDP, according to the CBO’s long-term budget projection released Thursday.
Most of the increase in deficits is projected to come from rapidly expanding Social Security and Medicare costs, as baby boomers leave the workforce and begin collecting benefits. Interest on the country’s debt poses a critical problem as well, as deficits grow and interest rates rise with Federal Reserve hikes ahead.
The CBO projects modest revenue increases as well, mainly from rising prices pushing income into higher tax brackets.
The budget office's report comes less than a month before government funding runs out on April 28 and two weeks after the debt ceiling was reimposed on the U.S. Treasury. Lawmakers will have two weeks after an April recess to pass legislation to keep the government funded and avoid a partial shutdown.
The CBO’s analysts said the exploding debt poses severe policy constraints for lawmakers and economic consequences for the U.S.
“Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy,” the analysts wrote.
“The amount of debt that is projected under the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis.”
Conservatives are likely to use the upcoming government funding deadline to push for spending cuts, and the projections could complicate a Republican push for tax reform that isn’t revenue neutral.
Rep. John YarmuthJohn Allen YarmuthDemocrats face full legislative plate and rising tensions The Hill's Morning Report - Presented by Alibaba - Democrats return to disappointment on immigration Yarmuth and Clyburn suggest .5T package may be slimmed MORE (D-Ky.), ranking House Budget Committee Democrat, said CBO’s projections prove “now is the wrong time for the President and Congressional Republicans to pursue new tax policy that would provide enormous tax breaks to corporations and the wealthy.”
“Tax reform can be a bipartisan effort, but not if it shifts the tax burden on to middle-class families or balloons federal debt,” said Yarmuth.