The latest projections from the Congressional Budget Office (CBO) confirm that the U.S. is on an unsustainable fiscal path, with national debt set to exceed its all-time high by 2029. Rising interest payments, demographic shifts, and unchecked spending are fueling deficits that will reach $2.5 trillion annually by 2035. While short-term interest rates are expected to stabilize, debt servicing costs will continue to climb, crowding out key investments and putting immense pressure on the economy.
Key Takeaways:
• Debt will hit record levels soon: Public debt will surpass post-WWII highs (106% of GDP) by 2029 and reach 118.5% of GDP by 2035.
• Deficits remain massive: The annual deficit will grow from $1.7 trillion in 2026 to $2.5 trillion in 2035.
• Rising interest costs: Federal interest payments have more than doubled since 2021 and will total $13.8 trillion over the next decade.
• Slowing economic growth: Real GDP growth will decline from 2.7% in 2024 to 1.8% by 2035, falling short of policymakers’ expectations.
• Social Security & Medicare pressures: Spending on these programs will surge as the population ages, straining federal resources.
• Revenue shortfalls: While tax receipts will rise modestly, they will not keep pace with spending growth, worsening fiscal imbalances.
CBO’s report makes it clear: without significant reforms, America’s fiscal trajectory threatens economic stability, limits policy flexibility, and puts future generations at risk.
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