Without changes in taxes and spending, the United States faces "steadily increasing" federal budget deficits and debt over the next 30 years that will push federal debt held by the public from 75% of GDP currently to 86% in 2026, and to 141% of GDP in 2046, the Congressional Budget Office said in its 2016 Long-Term Budget Outlook today (July 12, 2016).

CBO said a crucial factor in the long-term outlook is government spending for Social Security and Medicare, programs that accounted for almost 40% of the government's noninterest spending, on average, for the past 10 years. "Much of the spending growth for Social Security and the major health care programs results from the aging of the population: As members of the baby-boom generation age and as life expectancy continues to increase, the percentage of the population age 65 or older is anticipated to grow sharply, boosting the number of beneficiaries of those programs," the report said. "By 2046, projected spending for those programs for people 65 or older accounts for about half of all federal noninterest spending."

Another factor is interest on the government's debt, with net interest costs expected to rise because interest rates are expected to be higher in the future, making debt more costly to finance; and larger deficits requiring the government to borrow more.

CBO projected revenues as a share of GDP would be roughly flat over the coming decade, fluctuating between 18% and 18.2% of GDP. If lawmakers wanted to maintain the current 75% of GDP level of federal debt held by the public, they would need to cut noninterest spending or increase revenues, or a combination of both, by 1.7% of GDP annually, or about $330 billion in 2017 and $4 trillion through 2026, CBO said.

CBO projects that, under current law, the two Social Security trust funds combined would be exhausted in 2029. The report said the Hospital Insurance Trust Fund, a commonly used measure of the sustainability of Part A of Medicare, is projected to become exhausted in 2026.

House Budget Committee Chairman Tom Price (R-GA) issued a statement today, saying: "One wonders how anyone can look at this report and not feel compelled to take action. We have no choice. The Congressional Budget Office is sending yet another wake-up call, and policymakers better listen. These debt projections portend a horrible fiscal legacy that is being left to our kids and grandkids with a correspondingly weak economic growth outlook that will mean less opportunity for our nation and its citizens in the years to come. The good news is that we can enact policies that ensure a more responsible fiscal outlook. A balanced budget would help deliver greater economic growth. We can protect current seniors and tomorrow's retirees from insolvent Medicare and Social Security programs. We can do all this while embracing policies that support a healthier and more vibrant economy."

The report is attached.

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Long-Term Budget Outlook Report