CBO, The Long-Term Budget Outlook: 2025 to 2055.
Debt
In CBO’s projections, federal debt held by the public, measured as a percentage of gross domestic product (GDP), increases in every year of the 2025–2055 period. By 2029, that debt climbs to 107 percent of GDP, exceeding the historical peak it reached immediately after World War II. In 2055, it reaches 156 percent of GDP and remains on track to increase thereafter. Such large and growing debt would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel constrained in their policy choices.
Deficits
The total federal budget deficit remains large by historical standards over the next 30 years, averaging 6.3 percent of GDP—more than one and a half times its average over the past 50 years—and reaching 7.3 percent of GDP in 2055. Those amounts are the result of rising interest costs and sustained primary deficits, which exclude net outlays for interest. Primary deficits average 2.0 percent of GDP over the 30-year period; over the past 50 years, they averaged 1.7 percent of GDP.
Outlays and Revenues
Federal outlays rise over the next 30 years, reaching 26.6 percent of GDP in 2055. They have exceeded that level only twice: during World War II and during the coronavirus pandemic. Growth in net interest costs; spending for federal health care programs, particularly Medicare; and spending for Social Security, especially over the next decade, drive that increase. Measured as a percentage of GDP, revenues increase over the next few years, largely because of the scheduled expiration of certain provisions of the 2017 tax act. Revenues generally continue to rise thereafter, reaching 19.3 percent of GDP in 2055, mainly because growth in real income (that is, income adjusted to remove the effects of changes in prices) boosts receipts from individual income taxes.
