US debt expected to reach $56 trillion over the next 10 years

The United States is poised to add trillions of dollars to its national debt over the next decade, borrowing money faster than expected, at a time when major legislative battles loom over taxes and expenses.

The Congressional Budget Office said Tuesday that the U.S. national debt is expected to reach $56 trillion by 2034, as rising spending and interest costs outpace tax revenues. The rising costs of Social Security and Medicare continue to weigh on the nation's finances, as do rising interest rates, which have made it more expensive for the federal government to borrow enormous sums silver.

As a result, the United States is expected to continue to run large budget deficits, which are the gap between what it spends and what it receives in taxes and other revenue. The budget deficit in 2024 is expected to reach $1.9 trillion, up from $1.6 trillion forecast earlier this year. Over the next ten years, the annual deficit is expected to reach $2.9 trillion. As a share of the economy, debt held by the public in 2034 will represent 122% of gross domestic product, compared to 99% in 2024.

The new projections come as lawmakers prepare for a big battle over taxes and spending. Most of Trump's 2017 tax cuts will expire in 2025, forcing lawmakers to decide whether to renew them and, if so, how to finance them. The United States will also once again face a legal cap on how much it can borrow. Congress agreed last year to suspend the debt ceiling and allow the federal government to continue borrowing until next January.

These fights over taxes and spending will take place at a time when the country's fiscal environment is increasingly bleak. Population aging continues to strain Americas old-age and retirement programs, which face long-term deficits that could lead to reduced retirement and health benefits.

Both Democrats and Republicans have expressed concerns about the national debt as inflation and interest rates have soared in recent years, but spending has been difficult to control. The CBO report assumes that the 2017 tax cuts will not be extended, but this is highly unlikely. President Biden has said he will extend some of the tax cuts, including those for low and middle incomes, and former President Donald J. Trump has said he will extend all of them if he wins in November. Fully extending the tax cuts could cost about $5 trillion over 10 years.

The larger projected deficits were largely due to the Biden administration's decision to cancel more than $100 billion in student debt, the cost of new aid programs to Ukraine and Israel, and higher spending. higher than expected for Medicaid.

The CBO also said a deal by lawmakers, which Republicans insisted on, to recoup $20 billion from the Internal Revenue Service would reduce corporate and personal income tax revenues of 'about $32 billion through 2034. This assumption stems from the expectation that IRS money would be used to crack down on tax evaders, leading to more federal revenue.

The White House blamed the red ink on Trump's tax cuts and warned Tuesday that Republicans would only add to them if they controlled Washington.

Republican officials are already considering expanding the deficit even further in 2025 by giving tax breaks to companies that keep prices high even as inflation falls, White House spokesman Andrew Bates said.

High interest rates also make it more difficult to manage the U.S. debt burden. The budget office projects annual interest costs will reach $1.7 trillion in 2034, up from $892 billion this year. At this point, the United States would spend about as much on interest payments as it does on Medicare.

The harmful effects of rising interest rates, fueling higher interest costs on enormous existing debt, continue and lead to additional borrowing, said Michael Peterson, chief executive officer of the Peter G. Peterson Foundation , which promotes budgetary rigor. This is the definition of unsustainable.

Senator Chuck Grassley of Iowa, the top Republican on the Senate Budget Committee, said Mr. Biden was responsible for high borrowing costs and called for spending cuts.

The Biden administration has imposed inflationary conditions and astronomical interest rates on generations of Americans, Grassley said.

The budget office said one change in the U.S. economy in recent years was actually helping to reduce deficits and debt over time: a surge in immigration. Indeed, new immigrant workers are expected to pay nearly $1 trillion more in taxes than they consume in government benefits.

The bureau said the United States is on track to welcome about 8.7 million more immigrants between 2021 and 2026 compared to historical trends. They would have to pay taxes that would add $1.2 trillion to federal revenues over a decade, while consuming about $300 billion in federal benefits, mostly in the form of federal subsidies for health insurance for adults and children. children.

The costs and benefits of immigration continue to be a contentious political issue in the United States. The Biden administration on Tuesday announced new protections for immigrants who live in the United States illegally but are married to American citizens, protecting them from deportation and giving them the opportunity to work legally.

Jim Tankersley contributed reporting.

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