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  January 24th, 2025 | Written by

U.S. National Debt Set to Increase by $23.9 Trillion Over the Next Decade

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The Congressional Budget Office (CBO) has projected that the national debt of the United States is set to increase by $23.9 trillion over the next 10 years. This projection, available on Yahoo Finance, omits the impact of proposed tax cuts sponsored by President-elect Donald Trump, which could add trillions more.

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The CBO’s latest 10-year budget outlook paints a challenging fiscal picture, even as higher taxable incomes offer some relief. It anticipates annual budget deficits reaching 6.1% of the U.S. GDP by 2035, significantly higher than the 50-year average of 3.8%.

Trump’s administration, which aims to implement an extension of the 2017 tax cuts, faces potential deficits exceeding $4 trillion if spending is not reduced substantially. The new treasury secretary nominee, Scott Bessent, warned that the absence of these tax cuts could lead to economic downturns.

Deficits are slightly lower in the CBO’s projections compared to its earlier estimates, owing primarily to anticipated increases in taxable income. However, the budget deficit is projected to hit $1.87 trillion in the current year, down slightly from last year’s $1.91 trillion shortfall.

Data from IndexBox corroborates these findings, showing an expected narrowing of deficits relative to the economy through 2027. However, a reversal is anticipated as spending, particularly on Social Security, Medicare, and debt servicing, grows faster than revenue collections.

While anticipated government spending will reach $7 trillion this fiscal year, almost a quarter of the GDP, rising costs in national security and social programs remain a concern. Discretionary spending is slated to be $1.85 trillion next year, marking a downward trend compared to historical averages, yet still placing pressure on future budgets.

Amidst these fiscal challenges, Michael Peterson of the Peter G. Peterson Foundation urges lawmakers to handle expiring tax policies with care to prevent further fiscal harm. It is crucial to make policy decisions based on impartial estimates, such as the one provided by the CBO.

Source: IndexBox Market Intelligence Platform