The Congressional Budget Office (CBO) released its 10-year budget outlook, revealing that the national debt is expected to increase by $23.9 trillion in the coming decade. This projection does not include the potential impact of additional tax cuts proposed by President-elect Donald Trump.
While the outlook shows a slightly brighter picture due to higher taxable incomes, annual budget deficits are anticipated to reach 6.1% of the U.S. gross domestic product by 2035, significantly higher than the 3.8% average over the past 50 years.
The analysis highlights the challenges facing the incoming administration, particularly in light of proposed tax cuts that could further widen deficits unless accompanied by substantial spending reductions. Trump's proposed tax cuts, along with the extension of existing cuts, could exceed $4 trillion, raising concerns about the economy's stability.
The CBO emphasized the impact of net interest costs on the deficit, projecting that these costs could rival discretionary spending on defense or non-defense programs in the near future.
Despite a projected decrease in cumulative deficits from 2025-2034 compared to previous forecasts, the budget deficit for the current year is estimated to be $1.87 trillion. The federal government is expected to spend $7 trillion this fiscal year, equivalent to 23.3% of GDP.
With government spending on the rise, particularly in programs like Social Security and Medicare, concerns about the sustainability of these programs persist. The aging population and changing fertility patterns are cited as key factors driving mandatory spending increases.
Experts urge lawmakers to prioritize fiscal responsibility and base policy decisions on neutral, nonpartisan estimates to address the growing national debt and budget challenges.
