Juliegrace Brufke
U.S. debt held by the public will reach 77 percent of GDP by the end of 2025 if tax and spending policies are not reformed, the Congressional Budget Office projects.
The federal deficit is at its lowest since 2011, but the CBO projects it will go back up in the next two years, contributing to a rise in the federal debt.
“To put the federal budget on a sustainable path for the long term, lawmakers would have to make major changes to tax policies, spending policies, or both,” CBO Director Keith Hall said in a presentation to the American Business Conference.
The rise is driven primarily by the continued growth of health care programs including Medicare, Medicaid and Obamacare subsidies, in addition to higher interest payments on the debt.
A third of the population will join the 65 and older demographic within the next 10 years, leading to an increase in spending on medical and retirement programs. With life expectancies rising and aging baby boomers trickling into retirement, pressure is bound to mount on entitlement programs.
Although retirement spending, health care spending and interest spending is projected to go up, economists predict all other domestic spending will decrease over the next decade. But revenues are also expected to go down.
After a short uptick to 18.9 percent of the GDP in 2016, gains are projected to fall to just 18 percent in 2021, with a rise in income taxes but a decline in other forms of revenue.
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