US CBO projects growing debt, interest payments over next decade

US Congressional Budget Office’s 10-year projections for US defence spending, interest payments, and total deficit. (Congressional Budget Office/Janes)

The Congressional Budget Office (CBO) released its regular 10-year budget and economic report on 7 February, projecting growing deficits, public debt, and costs attributable to an ageing population while revenue remains largely the same by 2034.

The CBO emphasised that its forecasts, based on legislation enacted through 3 January 2024 and economic data as of 5 December 2023, assume current laws on taxes and spending remain generally unchanged.

This budget deficit is anticipated to increase from USD1.6 trillion in fiscal year (FY) 2024 to USD2.6 trillion in FY 2034, or from 5.6% of GDP in FY 2024 to 6.1% of GDP in FY 2034, significantly larger than the 3.7% average over the past 50 years, the CBO said.

The deficit projections are smaller than in the CBO’s May 2023 report due to a USD2.3 trillion reduction in discretionary spending over the 10-year period from the combination of the Fiscal Responsibility Act (FRA), which was signed into law on 3 June 2023, and the Further Continuing Appropriations and Other Extensions Act of 2024.