The Congressional Budget Office recently outlined a fiscal trajectory for the United States that projects the annual federal deficit will reach 5.9% of the nation’s Gross Domestic Product by 2030. This figure is notable not just for its scale, but for its comparison to the country’s significant, mandatory outlays. By that same year, the CBO anticipates that spending on major healthcare programs will also be equivalent to 6% of GDP, while social security initiatives are expected to consume 5.6% of GDP. These projections underscore a growing imbalance in federal finances, where borrowing will nearly match, or even exceed, the resources dedicated to some of the government’s most critical responsibilities.
Looking further ahead, the CBO’s long-term outlook indicates a steady climb in healthcare expenditures, which include Medicaid, Medicare, the Children’s Health Insurance Program, and Affordable Care Act premium tax credits. After remaining relatively stable until the end of the decade, these costs are forecast to rise to 8% of GDP by 2050. Similarly, social security payments, starting at 5.2% of GDP in 2025, are projected to increase to 5.8% by mid-century, though their growth rate appears less steep than that of healthcare. These increasing commitments contribute to a broader trend of expanding deficits, which are expected to climb from 5.8% of GDP this year to 6.9% by 2040.
While the percentage increases might seem modest on paper, their real-world impact involves colossal sums. The CBO previously reported that the federal deficit for 2026 is expected to be $1.8 trillion, a figure poised to rise to $1.9 trillion next year and then spike to $3.1 trillion by 2036. The Committee for a Responsible Federal Budget has been particularly vocal about these trends, advocating for deficits to be reduced to at least 3% of GDP. This stance has, at times, led to pointed exchanges, such as the recent one between Treasury Secretary Scott Bessent and the committee’s president, Maya MacGuineas. Bessent reportedly suggested MacGuineas should be “ashamed” for questioning how the White House would offset potential revenue losses following a Supreme Court decision regarding certain tariff implementations. MacGuineas, in turn, emphasized the urgency of addressing rising debt and interest payments, calling for significant spending cuts or revenue enhancements.
Beyond the direct costs of programs, the interest incurred on the national debt presents another substantial financial challenge. The CBO estimates that net interest outlays on the budget deficit will reach 3.8% of GDP by 2030. To put this in perspective, the $650 billion in AI capital expenditure this year, a sum that has garnered significant attention for its scale and its impact on economic growth, is estimated by Citadel Securities to be equivalent to approximately 2% of GDP. This comparison highlights the immense financial burden posed by interest payments alone.
The situation is projected to intensify, with net interest outlays anticipated to account for 4% of the nation’s entire GDP by 2031. By 2036, the Treasury is expected to allocate more than $2.1 trillion annually just to service its debt, equating to 4.6% of GDP. These figures contribute to a rising debt-to-GDP ratio, a key metric for economists assessing a nation’s financial health. Publicly held federal debt is projected to hit 108% of GDP by 2030, climb to 129% by 2040, and reach 175% by 2056. While the total debt-to-GDP ratio hit 124% in 2025, according to Treasury data, the sustained upward trajectory raises concerns among financial leaders. J.P. Morgan CEO Jamie Dimon has reportedly warned that investors could eventually lose confidence in the U.S.’s ability to manage its debt, potentially demanding higher returns for holding government bonds. Despite these warnings, 30-year Treasuries currently remain below 5%, with 10-year Treasuries hovering around 4%, suggesting that such a shift in investor sentiment has not yet materialized.
