The CBO views debt increases as a danger to the economy and action by lawmakers as needed to put the U.S. on a safer and financially sustainable path. They say the current path of federal debt could slow growth, increase interest payments to foreign nationals, heighten the odds of a fiscal crisis and make the economy more vulnerable to rising interest rates.
So, why is the debt rising over the next three decades?
The simple answer is that spending commitments are rising faster than tax revenues. This year, federal spending equals 23.5% of GDP. That figure will rise because of higher interest expenses and rising costs for major health care programs and Social Security. By 2052, the CBO said, federal spending will be 30.2% of GDP.
But taxes are not growing as a share of the total economy. They're 19.6% of GDP this year and are estimated to be 19.1% of GDP in 2052.
Underlying all of this is changes in U.S. demographics. Americans are steadily aging with a rising number becoming 65 or older, but they're also having fewer children and population growth will become more dependent on immigration from abroad, according to a separate report on demographics that the CBO released Wednesday.
Smaller population growth can hurt economic growth. That's because economies expand by a combination of adding workers and improving the productivity of workers. By 2043, fertility rates will be so low that immigration will account for all U.S. population growth, according to the CBO.