US debt growth estimate rises
The United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously forecast, as a result of rising costs for interest payments, veterans' health care, retiree benefits and the military, the Congressional Budget Office said on Wednesday.
The new forecasts, released Wednesday afternoon, project a $1.4 trillion gap this year between what the government spends and what it takes in from tax revenues. Over the next decade, deficits will average $2 trillion annually, as tax receipts fail to keep pace with the rising costs of Social Security and Medicare benefits for retiring baby boomers.
To put those numbers in context, the total amount of debt held by the public will equal the total annual output of the U.S. economy in 2024, rising to 118% of the economy by 2033.
Congress' nonpartisan budget scorekeeper now projects that the U.S. economy will barely grow this year, after adjusting for inflation, and that the unemployment rate will rise above 5%, before growth re-accelerates next year. It attributes the slowdown in growth to the Federal Reserve's
campaign to tame inflation.
While Republican lawmakers have blamed Biden and Democrats for the rising deficits, the report makes clear that bipartisan legislation — and the Fed's interest rate increases — are to blame for the jump in debt projections.
Newly enacted legislation in the past nine months will add about $1.5 trillion to cumulative deficits over the next decade, the budget office said. More than half that increase comes from a single law: an expansion of health care benefits for military veterans who were exposed to toxic burn pits. That bill passed overwhelmingly in the House and Senate, with majorities of Republicans in both chambers voting yes. Another $550 billion in additional deficits is attributable to increased military spending, which also has strong bipartisan support.
In contrast, the budget office said Biden's signature climate, tax and health care bill, which passed with only Democratic votes, would modestly reduce deficits over the next decade. That's because the bill's spending and tax credits were more than offset by its tax increases on corporations and high earners, along with its efforts to reduce the government's spending on prescription drugs for retirees.