Debt held by US public on track to hit record high in next decade: Estimate 

Federal budget analysts said Wednesday that the amount of debt held by Americans is on track to reach record highs in the coming years as the federal budget deficit is expected to rise over the next decade.

The Congressional Budget Office (CBO) predicts that public debt will increase significantly over the next decade, rising from 99% of GDP in 2024 to 116% of GDP in 2034. This increase would be the highest level ever, the CBO said. On the other hand, it pointed out that unless there is a change in policy, debt is likely to continue on an upward trajectory beyond 2034.

CBO said it expects federal spending to increase beyond 2028, pointing to increased spending on programs like Social Security and Medicare and higher net interest costs.

“Starting next year, net interest costs will be greater relative to GDP than at any time since at least 1940, the first year the Office of Management and Budget reported such data,” CBO said.

CBO projects the federal budget deficit will reach $1.6 trillion in fiscal year 2024, which ends at the end of September, and will continue to rise roughly through 2034, reaching $2.6 trillion. The ministry said its projected deficit for 2024 is about $100 billion lower than it predicted last spring.

CBO said the change in projections reflects a decline in discretionary spending resulting from the budget cap agreement, known as the Fiscal Responsibility Act, negotiated last year between former Speaker Kevin McCarthy (R-Calif.) and President Biden. He said it was the cause.

CBO projects that the cumulative deficit will reach $20 trillion from 2025 to 2034, but the bureau also said it is 7% ($1.4 trillion) lower than forecast as of May 2023. Ta.

Regarding gross domestic product, CBO said the deficit “will reach 5.6% in 2024, increase to 6.1% in 2025, and narrow to 5.2% in 2027 and 2028.”

“From 2028 onwards, the budget deficit as a percentage of GDP will increase, returning to 6.1% in 2034,” the agency said, adding, “Since the Great Depression, the only time the budget deficit exceeded that level was in the second “Only during and immediately after the World War, from 2007 to 2009,” he added. The financial crisis and the coronavirus pandemic.

The report comes as Congress is embroiled in a months-long spending battle that could intensify in the coming weeks as lawmakers seek to reach an agreement on government funding for fiscal year 2024. .