The nonpartisan Congressional Budget Office (CBO) recently released its long-term budget outlook and showed that budget deficits are on track to widen in the years ahead, pushing the national debt well above the size of the U.S. economy.
The CBO’s budget forecasts that the debt held by the public as a percentage of gross domestic product (GDP), a metric favored by economists for comparing debt to economic output, is projected to rise from 100% this year to 156% of GDP in 2055. That would be a full 50 percentage points higher than the current record, which was set in 1946 as the U.S. began its post-World War II demobilization.
Growth in the national debt will be driven by budget deficits widening from about 6.2% of GDP in 2025 to 7.3% in 2055 – well above the 1995-2024 average of 3.9%.
Federal spending will continue to be driven by mandatory spending programs led by Social Security and Medicare amid the aging of America’s population. Social Security spending is projected to rise from 5.2% of GDP this year to 6.1% in 2055, while the CBO sees Medicare spending rising from 3.1% to 5.8% of GDP in 2055.
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Social Security’s main trust funds are due to deplete their reserves in less than a decade, CBO found. The Old Age and Survivors Insurance Fund will be tapped out by 2033, though that would be a year later in 2034 if combined with the disability insurance trust fund.
When the Social Security trust fund is depleted, it would trigger an automatic benefit cut for recipients, which CBO estimates would be reduced by 24% in 2034. For a sense of proportion, the Social Security Administration noted that the average monthly benefit as of January 2025 was $1,976 – which would be reduced by $474 a month if a 24% cut to monthly benefits occurred.
Medicare’s hospital insurance trust fund is now projected to be depleted by 2052 after its outlook improved due to lower projected costs and higher revenue projections, though the projections are sensitive to economic conditions and are highly uncertain.
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Another major driver of increased spending will be net interest expenses, which are projected to rise from 3.2% of GDP this year to 5.4% in 2055 as the national debt continues to grow. By 2045, CBO projects the average interest rate on the national debt is expected to exceed the U.S. economy’s growth rate.
U.S. GDP is projected to grow at slower rates in the decades ahead, with real, inflation-adjusted GDP declining from 2.8% last year and 2.1% in 2025 to 1.4% in 2055. CBO wrote that the “slowdown in the growth of output results from slower growth in the size and productivity of the labor force; the latter stems partly from increased federal borrowing.”
CBO added that population growth has a “significant effect on the economy” and that without immigration, the U.S. population is projected to begin shrinking in 2033.
The CBO’s report also notes that its projections are based on its previous demographic, economic and budget projections released between November and Jan. 6, and don’t reflect administrative actions or judicial decisions taken since then that affect immigration, tariffs and other policy areas.
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The nonpartisan Peter G. Peterson Foundation (PGPF) warned that the CBO’s report shows the risks of the U.S. government’s fiscal trajectory, which could raise the risk of a debt crisis and other bad economic outcomes as the debt burden grows heavier.
“The risk of a fiscal crisis – that is, a situation in which investors lose confidence in the value of the U.S. government’s debt – would increase. Such a crisis would cause interest rates to rise abruptly and other disruptions to occur,” PGPF wrote. “The likelihood of other adverse outcomes would also increase. For example, expectations of higher inflation could erode confidence in the U.S. dollar as the dominant international reserve currency.”
The Committee for a Responsible Federal Budget (CRFB), a nonpartisan budget watchdog, warned that “high and rising debt and deficits would have many negative consequences for the budget and the economy including slower income growth, higher interest rates and interest payments on the debt, increased geopolitical risks, undue burden on future generations, reduced fiscal space to respond to emergencies, and an increased risk of a fiscal crisis.”
“The clock is ticking; what was once tomorrow’s problem is urgently becoming today’s,” said CRFB president Maya MacGuineas. “We need to snap out of this fiscal malaise and do the important work of budgeting, getting our fiscal house in order, and securing our nation’s future.”
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