WASHINGTON – The U.S. debt held by the public is expected to rise to 106 percent of the economy in 2039 from 74 percent this year, largely driven by increases in the cost of health benefits, the Congressional Budget Office said.
To put federal finances on a sustainable path, Congress must boost revenue, cut spending on benefit programs or combine the approaches, the nonpartisan CBO said in its long-term budget outlook released Tuesday.
“The unsustainable nature of the federal tax and spending policies specified in current law presents lawmakers and the public with difficult choices,” CBO said in the report. “Unless substantial changes are made to the major health care programs and Social Security, spending for those programs will equal a much larger percentage of GDP in the future than it has in the past.”
The CBO projected in April that the U.S. budget deficit will narrow to $492 billion this year, the lowest level since 2008 and down more than 60 percent from a record $1.4 trillion in 2009.
Higher spending on Medicare and Medicaid will cause the budget deficit to begin increasing in 2016, according to CBO’s projections.