On Thursday, the U.S. Congressional Budget Office forecasted considerable rises in federal budget deficits and debt over the coming 30 years, partly attributed to swiftly escalating interest expenses, while outlining slow economic growth and a declining labour force. The most recent long-term budget forecasts from the CBO indicate that federal deficits will rise to 7.3 per cent of the economy in the fiscal year 2055, up from 6.2 per cent in 2025. This is an increase from the 30-year average of 3.9 per cent recorded from 1995 to 2024. The U.S. national debt is projected to grow significantly, reaching 156 per cent of GDP by 2055, up from 100 per cent in 2025.
As Congress's non-partisan budget analyst, the CBO formulates its projections according to existing laws, which may change considerably soon. This is partly a result of the current effort by President Donald Trump and his Republican colleagues, who dominate the U.S. Senate and House of Representatives, to reduce federal expenditures and the size of the government workforce while also prolonging expensive tax cuts that are all set to end at this year's conclusion according to existing legislation. "Although this perspective is quite grim, it is viewed as an 'optimistic scenario,' since policymakers are contemplating additional trillions in tax cut extensions, increasing the debt," stated Michael Peterson, leader of the Peter G. Peterson Foundation, which promotes fiscal policy reform.
Debt Rises, Growth Slows
Estimates suggest that prolonging those tax cuts for ten years might increase deficits and debt by approximately $4.6 trillion. House Republicans have suggested reductions in spending, including cuts to federal healthcare programs, to generate savings. Trump has also mandated strict border security actions and initiatives to deport immigrants that specialists believe could negatively impact the economy due to labour shortages. In the coming months, it may be decided if Congress can enact laws that put Trump's agenda into action. Another uncertain element is the result of ongoing court challenges to Trump policies that are already in progress. The CBO does not take into account the results of those court cases in its long-term forecasts. The report likewise overlooks the possible effects on the U.S. economy from the wide array of tariffs Trump is enacting on imported goods.
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"An increasing debt burden could hinder economic growth, elevate interest payments to foreign creditors of U.S. debt, and present considerable threats to the fiscal and economic future," the Long-Term Budget Outlook: 2025 to 2055 indicated. Notably, government interest payments on its rising debt were forecasted to be 5.4 per cent of GDP in the fiscal year 2055, an increase from the expected 3.2 per cent in the current fiscal year, concluding on September 30. Those interest expenses were expected to surpass spending on the government's "discretionary" initiatives, including military operations, air traffic management, law enforcement, and nutrition assistance programs. In total, they will make up 5.1 per cent of the GDP by the year 2055.
The growing elderly population is expected to increase expenditures on Social Security benefits to 6.1 per cent of GDP by fiscal year 2055, rising from 5.2 per cent in 2025. The CBO predicts that U.S. population growth will be slower over the next 30 years compared to the previous three decades. That will hinder economic production in a declining workforce. Excluding any reference to Trump, it stated: "The U.S. population would start to decline in 2033 without immigration." It anticipated real economic expansion, estimated at 2.1 per cent for 2025, decreasing to 1.4 per cent by 2055. The interest rate on 10-year Treasury notes is expected to stay mostly unchanged over the next 30 years, "indicating upward pressure due to rising federal borrowing and downward pressure from a slowdown in labour force growth."
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