The nation's debt burden will be twice as large as its annual economic output in 30 years, according to long-term budget projections released by the Congressional Budget Office (CBO) on Tuesday.
By 2051, the debt held by the public would amount to 202 percent of GDP, nearly double its current level. Debt levels surpassed 100 percent of GDP for the first time since World War II last year, and is expected to break its all-time record in the coming years.
The latest projections, an addendum to the short-term budget outlook released last week, show that much of the problem lies in long-term issues.
While the deficit is projected at 10.3 percent of GDP this year, as the country emerges from the COVID-19 pandemic, it is also projected to drop to an average of 4.4 percent through 2031. The following decade, it would rise to 7.9 percent of GDP, before spiking even further to 11.5 percent of GDP between 2042 and 2051, according to the CBO.
During that period, revenues rise only slightly, while expenditures on major health care programs, Social Security, and interest payments spike, according to the projections.
The interest costs alone are projected to make up a significant chunk of the debt, rising from 1.4 percent of GDP to 7 percent of GDP in the last decade of the thirty-year budget window. That's larger than spending on Social Security, or on the combined annual spending on non-mandatory defense and domestic federal programs combined.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the long-term outlook was "perilous."
"We shouldn’t shy away from borrowing what’s needed to end this pandemic, support the recovery, and help sustain households and businesses through this crisis. But along the way, we can’t afford to ignore the long term," she said.
Already, there is debate among Republicans and centrist Democrats about whether the $1.9 trillion package COVID-19 relief package Democrats are advancing is too big.
Without a long-term fix, the debt could stifle future economic growth, according to MacGuineas.
"Ignoring this long-term debt picture will harm economic growth, hold down incomes, and make it even more difficult for us to tackle income inequality, support for families, and a backlog of necessary infrastructure improvements," MacGuineas said.