• U.S. public debt at the end of August was $20.8 trillion
  • Debt is expected to approach $43 trillion by 2050
  • Interest payments, especially if rate rise, are expected to be a main contributor to growing deficits

The Congressional Budget Office predicted Monday the U.S. debt will be nearly double the size of the nation’s economy by 2050 – about $43 trillion dollars – the highest in the nation’s history. As of Aug. 31, the U.S. public debt was $20.8 trillion, about 98% of the gross domestic product.

The CBO warned rising interest rates could make the debt load unmanageable in years to come.

“High and rising federal debt makes the economy more vulnerable to rising interest rates and, depending on how that debt is financed, rising inflation. The growing debt burden also raises borrowing costs, slowing the growth of the economy and national income, and it increases the risk of a fiscal crisis or a gradual decline in the value of Treasury securities,” CBO said.

The nonpartisan agency said even if economic conditions are better than what it is projecting, 2050 debt still will be much higher than it is today.

“Federal debt held by the public has increased significantly in recent years. At the end of 2007, federal debt was 35 percent of GDP,” CBO noted. “Deficits arising from the 2007–2009 recession and from policies implemented to counter the effects of the downturn caused debt to grow in relation to the economy over the next five years. By the end of 2012, debt as a share of GDP had doubled, reaching 70 percent, and it has climbed since then, reaching 79 percent by 2019.”

The 2017 tax reform bill cut federal revenue by $1.5 trillion and failed to pay for itself, as promised.

CBO blamed the coronavirus pandemic for record deficits, projected to grow to 5% of GDP by 2030, and 13% by 2050, “larger in every year than the average deficit of 3% of GDP over the past 50 years.”

CBO warned net spending for interest will nearly quadruple, accounting for most of the deficit growth along with Social Security and Medicare spending.

Once the effects of the coronavirus pandemic dissipate, revenues are projected to rise, especially once certain provisions of the 2017 tax reform bill expire in 2025. The projections show revenues still rising after 2030, but not enough to keep pace with spending growth.