The United States is on track to hit record-setting debt as deficit spending under President Trump and a GOP-controlled Congress continues to surge, according to a new report by the nonpartisan Congressional Budget Office (CBO).
The U.S. national debt is projected to reach 78% of gross domestic product (GDP) by the end of this year — the highest level since about 1950, according to the latest CBO estimates.
At this rate, that debt would actually exceed the size of the economy within a decade, breaking the historic record of 106 percent by 2034.
Within 16 years, the federal deficit is expected to be the largest in U.S. history, outpacing the fiscal shortfalls that followed World War II.
The CBO also found that the amount the U.S. government pays in interest to China and others holding U.S. debt would surpass projected Social Security spending in 2048.
Trump and the GOP’s recent tax and spending laws are adding to the short-term debt by reducing government revenue, while most of the rising and long-term debt is related to the ballooning costs of programs like Social Security and Medicare.
“Most of the spending growth for Social Security and Medicare result from the aging of the population,” said CBO Director Keith Hall.
“Revenues, in contrast, are projected to be roughly flat over the next few years in relation to GDP,” he said.
The Hill added:
Trump and his allies in Congress have argued that an expanding economy is the key to drive down debt, but the growth necessary to do so would have to be historic. CBO projected that growth would spike briefly as a result of the tax and spend policies, but quickly fall back to a long-term average of just 1.9 percent.
To keep the debt burden at its current level, Congress would have to cut spending or increase revenues by a combined 1.9 percent of GDP every year. That amounts to a 10 percent cut in spending and an 11 percent increase in tax revenue, or some combination of the two.
In 2019 alone, that would amount to a tax increase that would add $1,300 in taxes for people in the middle of the tax distribution, or, alternatively, a Social Security cut that would reduce payments by $1,800 for people in the middle of the lifetime earnings distribution.