Analysis of CBO’s March 2024 Long-Term Budget Outlook – CRFB
- Debt Will Surge Past Record Levels as a Share of the Economy, with federal debt held by the public rising from 97 percent of Gross Domestic Product (GDP) in Fiscal Year (FY) 2023 to a record 166 percent of GDP by 2054.
- Deficits Will Grow Rapidly, from an already-high 5.6 percent of GDP in FY 2024 to 8.5 percent of GDP by 2054. The 2054 deficit will be more than twice the 50-year historical average and higher than any time in modern history outside of World War II, the Great Recession, and the COVID-19 pandemic.
- Spending Will Grow Much Faster than Revenue, rising from 23.1 percent of GDP in FY 2024 to 24.1 percent by 2034 and to 27.3 percent by 2054. Interest costs will more than double from 3.1 percent of GDP in 2024 to 6.3 percent by 2054, while major health and retirement spending will grow from 10.7 percent of GDP to 14.1 percent. Revenue will also grow but much more modestly – from 17.5 percent of GDP in 2024 to 18.8 percent by 2054.
- Major Trust Funds Are Approaching Insolvency, with the Highway Trust Fund running out by FY 2028, the Social Security Old-Age and Survivors Insurance (OASI) trust fund exhausting its reserves by FY 2033, and the Medicare Hospital Insurance (HI) trust fund reaching insolvency by FY 2035. On a theoretically combined basis, the Social Security retirement and disability insurance trust funds will be insolvent by FY 2034.
- The Budget Outlook is Better Than Last Year’s but Still Troubling. CBO projects debt will total 163 percent of GDP by FY 2053, which is 18 percentage points of GDP lower than projected in last year’s extended baseline. This improvement is largely driven by higher immigration, stronger projected economic growth, and methodological changes.