If current laws remain unchanged, federal budget deficits and debt will climb steadily over the next 30 years, with debt relative to gross domestic product (GDP) reaching 150% by 2047 -- the highest level on record, according to the Congressional Budget Office's 2017 Long-term Budget Outlook. In fact, federal debt held by the public currently stands at 77% of GDP, its highest level since shortly after World War II.
Deficits are expected to climb from 2.9% of GDP in 2017 to 9.8% of GDP in 2047 because spending growth is expected to outpace growth in revenue. It points to spending increases for Social Security, the major health care programs (mainly Medicare) and interest on the government's debt as particularly troubling.
"The prospect of such large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges," CBO notes.
It details that if current laws remain unchanged, "The amount of debt that is projected under the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis, an occurrence in which investors become unwilling to finance a government’s borrowing unless they are compensated with very high interest rates."
It also notes that the longer lawmakers wait to act, the larger the necessary policy changes would become.
President Donald Trump campaigned on major changes in Washington, including repealing and replacing ObamaCare and reforming the tax code. But an initial failure on the latter promise signals he may have a much tougher time enacting his agenda than hoped.