CBO: Deficit to grow from $1.6 trillion to $2.6 trillion by 2034, debt will equal 116% of GDP

The annual budget deficit will grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034 and the national debt will rise to 116% of the size of the entire U.S. economy, according to the Congressional Budget Office's 10-year budget outlook. 

"The deficit totals $1.6 trillion in fiscal year 2024, grows to $1.8 trillion in 2025, and then returns to $1.6 trillion by 2027. Thereafter, deficits steadily mount, reaching $2.6 trillion in 2034. Measured in relation to gross domestic product (GDP), the deficit amounts to 5.6 percent in 2024, grows to 6.1 percent in 2025, and then shrinks to 5.2 percent in 2027 and 2028," read the report, released on Wednesday.

"After 2028, deficits climb as a percentage of GDP, returning to 6.1 percent in 2034. Since the Great Depression, deficits have exceeded that level only during and shortly after World War II, the 2007–2009 financial crisis, and the corona­virus pandemic," the CBO also found.

For comparison, the budget deficit increased by $205.4 billion (26.4 percent) to $984.4 billion in the fiscal year 2019, prior to the COVID pandemic.

The CBO concluded that the national debt "held by the public" is projected to jump from 99% of GDP at the end of 2024 to 116% of GDP by the end of 2034, which would be "the highest level ever recorded" in U.S. history.

"After 2034, debt would continue to grow if current laws generally remained unchanged," the CBO reported. 

The debt held by the public will increase from $27.1 trillion at the present to $48.3 trillion by the end of 2034.

The Committee for a Responsible Federal Budget pointed out that the CBO projected that "the trust funds for highways and Social Security Old-Age and Survivors Insurance will be exhausted by the end of the decade."

The president of the CRFB, Maya MacGuineas, called for Congress to establish a fiscal commission to begin work on reforms that control federal spending. "Interest on the national debt, already higher than federal spending on children or Medicaid, will exceed spending on defense this year, on its way to $1 trillion by 2026. This is no way to run a country. Policymakers need to take this somber moment to reflect on the grave situation we face and commit themselves to do better. Last year’s Fiscal Responsibility Act was a good start, but there is so much more to be done," MacGuineas said.

"We can start by actually passing a budget and by establishing a bipartisan fiscal commission to tackle some of these issues. We need a real plan to put the national debt on a downward sustainable path before it’s too late," she added.