June 29 (UPI) -- The Congressional Budget Office is projecting the percentage of the federal debt held by the public to surge in the next two decades on increased spending on major healthcare programs and social security.
The nonpartisan agency said in its annual long-term budget outlook published Wednesday that federal debt held by the public equals 98% of the country's gross domestic product this year, but that number is expected to surpass its historical high to 107% in 2029 before hitting 115% in 2033.
Projections state that the federal debt held by the public will hit 181% by 2053.
"Measured as a percentage of GDP, federal debt is now projected to be 2 percentage points higher in 2023 and 9 percentage points lower in 2052 than it was in last year's report," it said. "Overall, CBO's projections of debt have increased through 2042 and decreased in later years."
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It added that the deficit, which is the amount the government has spent over its revenues, equals 5.8% of GDP this year, and is to experience a slight decline to 5% in 2027 before growing each year to 10% in 2053.
"Over the past century, that level has been exceeded only during World War II and the coronavirus pandemic," it said. "The increase in the total deficit results from faster growth in spending than in revenues."
According to the report, spending is to climb in the next few decades due to rising interest rates. Spending is also to increase for major healthcare programs and social security in order to accommodate an aging population and growing healthcare costs.
The agency continues that outlays, meaning the money spent for a specific purpose, for social security, Medicare and Medicaid for people age 65 and older amount to less than 30% of all federal non-interest spending, but will amount to more than 40% by 2053.
"Over the past five decades, spending on the major healthcare programs has grown faster than the economy -- a trend that persists in CBO's projections," it said, adding that the primary driver is spending on Medicare, which is projected to increase over the next three decades due to rising healthcare costs per person and "demographic trends."
Non-profit public policy organization Committee for a Responsible Federal Budget said in an analysis of the the CBO report that the high debt and deficits present "significant risks and threats" to the economy as well as the nation.
"In the near term, continued fiscal pressures could make it more difficult for the Federal Reserve to tamp down inflation without causing a recession," it said.
"Over time, high and rising debt levels also hinder economic growth, threaten economic vitality, strain the federal budget through rising interests payments, create geopolitical challenges and risks, make responding to new emergencies more challenging and impose intergenerational unfairness between today's Americans and future generations."