The latest long-term outlook from the Congressional Budget Office shows a big increase in the national debt over the next 30 years, with publicly held debt rising to 166% of gross domestic product by 2054.
That’s actually an improvement over the long-term outlook released in June 2023, which estimated that the debt-to-GDP ratio would hit 181% by 2053. The CBO said the change in the outlook was due to “stronger growth of the potential labor force over the next 10 years, largely driven by increased net immigration, and faster capital accumulation over the next 30 years.” The reductions in spending imposed by the Fiscal Responsibility Act of 2023 also played a key role.
Still, the increase in debt will likely be one for the history books. Debt as a percentage of GDP is projected to hit 107% by 2029, surpassing the peak seen during World War II.
One particularly notable aspect of the outlook is the rising cost of interest payments on the national debt. The CBO now estimates that interest will be the largest single line item in the federal budget by 2051, and by 2054, the cost of interest payments as a percentage of GDP will rise to 6.3%, roughly twice the current level.
Fiscal watchdogs said the latest data should prompt lawmakers to act. “This is yet another reminder that politicians put political priorities ahead of the long-term health of the country,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement. “There is no way to look at these eye-popping numbers without realizing we need to make a change.”
