Federal debt held by the public will nearly double as a share of the U.S. economy, from 78 percent today to 144 percent by fiscal 2049, the Congressional Budget Office projected Tuesday.
By contrast, the record high currently stands at 106 percent of gross domestic product, in fiscal 1946 after the massive World War II military buildup; that record is likely to be breached in fiscal 2037 under the CBO’s updated scenario.
In its new long-term budget outlook, however, the agency said it has scaled down its estimate of debt growth slightly since its previous forecast.
In last year’s report, CBO estimated the debt burden would reach 152 percent of GDP in 2048, compared to the latest projection that it will reach 141 percent of GDP in 2048. The World War II-era record will be broken three years later than in last year’s forecast.
The agency attributed the slightly slower debt growth to lower projected spending on disaster relief, on servicing the debt due to lower interest rates and total debt, and on Social Security and major health care programs.
The CBO also noted that if Congress passes a budget deal that raises the spending caps in fiscal 2020 or does not let individual tax cuts expire in 2026, as scheduled under current law, the debt would rise faster.
The agency stressed that its projections are sensitive to underlying factors such as the productivity growth and interest rates, but said debt would grow rapidly even in a favorable scenario.
“The upshot is that even if productivity growth or interest rates differed in meaningful ways from our projections in the direction that would tend to reduce deficits, debt several decades from now would probably be much higher than it is today if current laws generally did not change,” CBO Director Phillip L. Swagel said in a statement accompanying the report.