Over the next decade, America will add trillions of dollars to its debt. According to a recent Congressional Budget Office report, the national debt will rise to over $56 trillion by 2034. Alan Rappeport of the New York Times reports:
The United States is on pace to add trillions of dollars to its national debt over the next decade, borrowing money more quickly than previously expected, at a time when big legislative fights loom over taxes and spending.
The Congressional Budget Office said on Tuesday that the U.S. national debt is poised to top $56 trillion by 2034, as rising spending and interest expenses outpace tax revenues. The mounting costs of Social Security and Medicare continue to weigh on the nation’s finances, along with rising interest rates, which have made it more costly for the federal government to borrow huge sums of money.
As a result, the United States is expected to continue running large budget deficits, which is the gap between what America spends and what it receives through taxes and other revenue. The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast earlier this year of $1.6 trillion. Over the next 10 years, the annual deficit is projected to swell to $2.9 trillion by 2034. As a share of the economy, debt held by the public in 2034 will be 122 percent of gross domestic product, up from 99 percent in 2024.
The new projections come as lawmakers are gearing up for a big tax and spending battle. Most of the 2017 Trump tax cuts will expire in 2025, forcing lawmakers to decide whether to renew them and, if so, how to pay for them. The United States will also once again have to deal with a statutory cap on how much it can borrow. Congress agreed last year to suspend the debt limit and allow the federal government to keep borrowing until next January.
Those fights over tax and spending will be taking place at a time when the country’s fiscal backdrop is increasingly grim. An aging population continues to weigh on America’s old-age and retirement programs, which are facing long-term shortfalls that could ultimately result in reduced retirement and medical benefits.
Action Line: You know from your own family budgeting that debt can’t be taken on forever. At some point, all debts must be paid. Prepare your family for when that time comes. Save til it hurts, and be sure you’re well-diversified. If you want help, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
