We won’t have to wait long to watch America go underwater on the national debt.
Last week, the conservative Media Research Center (MRC) reported on a new analysis by the Congressional Budget Office (CBO) that indicated the national debt will outpace America’s gross domestic product, or GDP, by next year.
Citing CBO numbers, the MRC pointed out that as a percentage of the U.S. GDP, the national debt will rise to 97.3% in the fiscal year 2023, then reach 99% of GDP in FY 2024, and finally crest above our entire national economic output in 2025 at 101.7%.
FY 2025 starts on Oct. 1.
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Barring some unforeseen circumstances, such as widespread fiscal sobriety, the national debt will then continue to increase in the ensuing years, reaching 116% of GDP in 2034 and 172% in 2054.
In comparison, the highest debt-to-GDP percentage in U.S. history is 106%, reached in 1946 as America emerged from World War II.
The MRC noted the primary driver of such boosts in spending are mandatory programs such as Social Security and Medicare.
The effect on the budget will be profound in other ways.
Starting in 2025, the net cost of the federal government’s interest on the national debt will be the highest percentage of GDP recorded since 1940.
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Meanwhile, the MRC noted the country faces a bleak outlook on the national deficit as well. The deficit is the shortfall in the federal government’s annual budget.
“After setting a record high for any non-COVID pandemic year in FY2023 ($1.7 trillion), the budget deficit is projected to remain in the $1.6-1.8 trillion range through FY2027, then steadily rise to $2.6 trillion in 2034,” the MRC reported.
“The deficit will amount to 5.6% of GDP in FY2024, growing to 6.1% in FY2025, the same level as in 2034 – but, still significantly higher than the 3.7% that deficits have averaged over the last 50 years.”
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The CBO noted how rare the anticipated new normal once was in its report.
“Since the Great Depression,” CBO analysts wrote, “deficits have exceeded that level only during and shortly after World War II, the 2007–2009 financial crisis, and the coronavirus pandemic.”
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