WASHINGTON, July 11 — The Congressional Budget Office is projecting that the nation’s debt load will keep climbing through the next decade, a trajectory that carries real consequences for every American who pays taxes, relies on federal programs, or simply watches the news. The CBO’s latest long-term budget outlook, released in June 2024, paints a picture of persistent red ink. Under current law and without major policy changes, the federal deficit is expected to remain above $1.5 trillion each year.
By 2034, that annual shortfall is projected to reach $2.6 trillion. That’s a lot of borrowing.
And borrowing costs money. One of the most striking findings in the report concerns net interest payments on the federal debt. The CBO estimates those costs will rise from $870 billion in 2024 to $1.4 trillion in 2034.
By that point, interest on the debt is expected to become the largest single category of federal spending — bigger than Medicare, bigger than defense, bigger than anything else. For context, that means the government would be spending more on servicing past borrowing than on any other program or function.
It’s a shift that budget watchers have been warning about for years, and the numbers now make the trend impossible to ignore. The debt-to-GDP ratio, a standard measure of the nation’s fiscal health, is projected to climb from 99% in 2024 to 116% in 2034. That would be the highest level in American history, surpassing even the peak reached during World War II.
The CBO does expect the Federal Reserve to begin cutting interest rates in 2025. But even with rate cuts, the average interest rate on Treasury debt is still forecast to rise. That’s because the government will have to refinance older debt issued at lower rates, locking in higher costs as bonds mature and are replaced.
The debt limit is set to be reinstated on January 2, 2025. That means Congress will need to raise or suspend it again to avoid a default on the nation’s obligations.
The Treasury Department will continue to issue securities at auction to finance government operations. But if deficits widen, borrowing needs could rise, putting additional pressure on the debt limit debate. The CBO’s projections assume no major changes in tax or spending policy.
That’s a big assumption, given the political landscape. But it’s also the standard baseline the agency uses to give lawmakers a clear picture of where current law is headed.
The report also flags key risks that could make the fiscal picture even worse. A recession, for example, would drive up deficits as tax revenues fall and spending on safety-net programs rises. Higher-than-expected interest rates would also increase borrowing costs, accelerating the growth in net interest payments.
The CBO updates its projections annually, and the reports are used by Congress throughout the budget process. They serve as a kind of fiscal compass — one that, at the moment, is pointing toward increasingly rough waters. For families, the implications are not abstract.
Rising federal debt can eventually crowd out private investment, push up interest rates on mortgages and car loans, and reduce the government’s ability to respond to future crises. When the government spends more on interest, it has less to spend on things like infrastructure, education, or health care.
The numbers in the CBO report are projections, not predictions. They depend on a host of assumptions about economic growth, interest rates, and policy choices. But the direction is clear, and the scale is enormous.
As the 2025 debt limit deadline approaches, and as the next round of budget negotiations takes shape, the CBO’s work will be at the center of the conversation. Lawmakers will have to decide whether to change course — and if so, how.
