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The United States is poised to add trillions of dollars to the national debt over the next decade as rising costs of the Social Security program and rising interest costs dig the country into debt. into a deeper financial hole, according to a report released by Congress on Friday. Budget Office.
The new budget forecast predicts that the United States will record a budget deficit of $1.9 trillion this fiscal year and that the annual deficit over the next ten years will reach $21.1 trillion. This will add to the national debt which is currently over $36 trillion.
By 2035, debt as a share of the US economy will rise to 118 percent, the largest in history. The current debt is 100 percent of GDP.
Although the figures show a slightly smaller deficit than the CBO projected last June, due to higher wages and higher savings, the nation’s financial situation has been ready to get worse.
This is because the budget office believes that the 2017 tax cuts scheduled to expire this year will actually end, and taxes will begin to increase next year. But with President-elect Donald J. Trump determined to retake the White House next week and Republicans in full control of Congress, these tax cuts are sure to be extended.
Continuing to cut taxes is expected to cost more than $4 trillion over the next decade, according to previous estimates from the Congressional Budget Office.
Mr. Trump and his advisers have expressed concern about the national debt, but have offered few suggestions on how to reduce the deficit.
At his confirmation hearing this week, Scott Bessent, Mr Trump’s pick for treasury secretary, said he believed the US had a “spending problem” but did not share details. about what he will recommend to be cut. He said that “federal domestic spending” should be adjusted and he would point out the importance of cutting waste.
“The federal government has a big deficit spending problem,” Mr. Bessent said. “We must work to put the fiscal house in order.”
Mr. Bessent suggested that the country could improve its financial situation by creating an American treasury that “utilizes” the assets of the United States. It has set a goal of reducing the annual budget deficit to 3 percent of GDP from the 6.2 percent that CBO had projected for this year.
Mr. Trump has announced plans to create a so-called Department of Government Efficiency that will seek ways to reduce wasteful spending. However, it will not have the power to actually cut costs but will act as an advisory committee. It is not clear whether his proposal will be heard.
The president-elect downplayed the impact that extending the tax cuts — and raising new taxes — could have on the budget deficit, saying the U.S. could generate tax revenue from tariffs on the import to pay the price. Mr Trump said this week he would create a new “External Revenue Service” to collect the duties, which are currently collected by consumers and border security.
However, Mr. Trump’s salary creates a small deficit in the annual deficit. The Tax Foundation, a right-leaning think tank, estimates that a 20 percent global tax would raise $3.3 trillion from 2025 to 2034.
Other policies that Mr. Trump and Republicans are considering could increase the deficit.
The CBO report notes that eliminating $20 billion from the Internal Revenue Service, which could use the money for tax evasion, would add $46 billion to the deficit through 2034. .
Republicans are expected to cut more funding for the IRS, and Mr. Bessent suggested this week that the agency should focus on using its resources to improve technology rather than go after wealthy refugees.
