WASHINGTON: US sovereign debt is approaching historically high levels and in three decades debt service will cost as much as Social Security spending, the Congressional Budget Office reported Tuesday.
The annual projections from the independent congressional body drew a grim picture of America's fiscal situation, forecasting that interest costs as a share of GDP will double in the next 10 years -- rising to 3.1 percent from 1.6 percent this year.
Because of the sweeping corporate and individual income tax cuts enacted by President Donald Trump in December, government revenues will be flat for the next two years before rising in 2026, when personal income tax rates are due to rise again.
Interest payments are also projected to rise to a record 6.3 percent by 2048 -- when, according to the CBO, they will exceed all discretionary spending and be "about equal" to spending on Social Security, the behemoth public retirement system that is one of the largest burdens on the US budget.
The forecasts presume the central bank will continue on its current path of raising rates in light of rising GDP growth and inflation and falling unemployment.
US sovereign debt is expected to reach 78 percent of GDP this year, its highest level since World War II, approaching 100 percent in a decade before reaching 152 percent by 2028.
"That amount would be the highest in the nation's history by far," the statement said.
Overall federal spending is projected to rise from the current 19 percent of GDP to 23 percent over the next 30 years, principally due to spending on increasingly costly social programs for retirement, and health coverage for the poorest and elderly.
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