By Richard Cowan
WASHINGTON (Reuters) – The U.S. Congressional Budget Office on Thursday projected significant increases in federal budget deficits and debt over the next 30 years, in part due to rapidly rising interest costs, as it sketched out sluggish economic growth and a shrinking workforce.
The CBO’s latest long-term budget projections show federal deficits accelerating to 7.3% of the economy in fiscal year 2055 from 6.2% in 2025. That is up from the 30-year average from 1995 to 2024 of 3.9%.
The U.S. public debt meanwhile is seen rising alarmingly, to 156% of GDP in 2055 from 100% in 2025.
As the non-partisan budget analyst for Congress, the CBO bases its projections on current law, which could change significantly in the short-term.
That is due in part to the push now underway by President Donald Trump and his fellow Republicans who control the U.S. Senate and House of Representatives to slash federal spending and the government’s workforce, while also extending costly tax cuts that are due to expire at the end of this year under current law.
Trump also has ordered tough border security measures and efforts to deport immigrants that experts see potentially denting the economy as a result of labor shortages.
Whether or not Congress will be able to pass legislation implementing Trump’s agenda could be determined over the next several months.
Another unknown factor is the outcome of court challenges to Trump policies that already are pending. The CBO does not include any consideration of the outcome of those court cases in its long-term projections.
The report also does not factor in the potential impact on the U.S. economy from a broad range of tariffs Trump is implementing against foreign goods.
“Mounting debt would slow economic growth, push up interest payments to foreign holders of U.S. debt and pose significant risks to the fiscal and economic outlook,” the Long-Term Budget Outlook: 2025 to 2055 stated.
Of particular note, government interest payments on its ballooning debt were projected at 5.4% of GDP in fiscal year 2055, up from the anticipated 3.2% in the current fiscal year that ends on September 30.
Those interest costs were projected to be even larger than spending on the government’s “discretionary” programs, such as military operations, air traffic control, law enforcement and nutrition programs. Altogether, those will comprise 5.1% of GDP in 2055.
The aging population will push spending on Social Security benefits to 6.1% of GDP in fiscal year 2055, up from 5.2% in 2025.
The CBO forecast slower U.S. population growth over the next 30 years than during the past three decades. That will slow economic output in a shrinking labor force. Without mentioning Trump, it added: “Without immigration, the U.S. population would begin to shrink in 2033.”
It projected real economic growth, forecast at 2.1% in 2025, slowing to 1.4% in 2055.
The interest rate on 10-year Treasury notes will remain largely flat over the 30 years, “reflecting upward pressure from increases in federal borrowing and downward pressure from slowdowns in the growth of the labor force.”
(Reporting by Richard Cowan; Editing by Andrea Ricci)
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