US Public Debt Burden Will Reach 181% of GDP by 2053, CBO Report

(CTN News) – The Congressional Budget Office (CBO) released its latest projections on the US public debt burden, revealing a slight improvement for 2053.

According to the nonpartisan agency, the debt-to-GDP ratio is expected to reach 181% by that year, a marginal improvement compared to previous long-term projections. This positive shift is attributed to discretionary spending caps implemented in a recent agreement to raise the federal debt ceiling.

Factors Contributing to Projected Debt Reduction in 2053

The CBO’s analysis indicates that budget deficits will surpass the 1993-2022 average of 3.7% of GDP over the next three decades. The deficits are projected to increase to 6.4% in 2033 and a staggering 10.0% in 2053.

The rise in outlays for net interest, Social Security, and healthcare programs, coupled with relatively stagnant revenues in the 18-19% range, contribute to this forecast. The aging population plays a significant role in driving these upward trends.

These projections are based on the assumption that individual income tax rates will revert to higher levels after 2025 when the tax cuts implemented by Republicans in 2017 expire.

However, lawmakers from both parties have expressed their intentions to preserve some or all of these tax cuts. President Joe Biden has also advocated for maintaining the tax cuts for American families earning less than $400,000 annually. Retaining these tax cuts will inevitably increase the debt-to-GDP ratio.

Projected Debt-to-GDP Ratio: A Slight Improvement Over Previous Estimates

While the projected debt-to-GDP ratio of 181% for 2053 represents a slight improvement over last year’s estimate of 185%, the CBO had initially projected a ratio of 195% for 2053 in February. The recent spending legislation and revised economic and population growth assumptions account for this change.

The CBO attributes the improved projection to an anticipated reduction in total outlays due to discretionary spending caps enacted for the 2024 and 2025 fiscal years.

These caps were part of the Fiscal Responsibility Act of 2023, which suspended the debt ceiling and prevented an unprecedented default when it was signed into law on June 3.

The effects of these spending reductions are expected to impact future projections per the forecasting process’s requirements followed by the CBO.

In summary, the Congressional Budget Office’s latest projections indicate a slight improvement in the US public debt burden for 2053.

Despite this positive development, budget deficits are anticipated to exceed historical averages, necessitating careful consideration of fiscal policies to address the rising debt-to-GDP ratio in the long term.