According to the Congressional Budget Office projections, without budget reforms, accumulated federal debt held by the public will almost double from $26 trillion in 2023 to $46 trillion by 2033.
The federal budget deficit will go from $1.41 trillion in 2023 to $2.85 trillion in 2033, according to new estimates from the Congressional Budget Office. In 2023, federal spending will be $6.22 trillion, while federal taxes will be $4.81 trillion. This is a 29 percent difference. By 2033, taxes of $7.10 trillion would be 40 percent less than what is expected to be spent, which is $9.95 trillion. Even though Republican tax cuts will end in 2025, it is expected that deficits will grow quickly.
Without changes to the budget, the public's share of the federal debt will grow from $26 trillion in 2023 to $46 trillion in 2033, which is almost twice as much. This huge increase in debt will hurt growth and could lead to a serious economic crisis.
As the CBO chart shows, Social Security and Medicare are the main causes of rising deficits and debt. It is expected that the total cost of the two programs for older people will go from $2.35 trillion in 2023 to $4.46 trillion in 2033. By then, spending on these two programs will be four times higher than spending on national defense.
Congress should change how Social Security and Medicare work to deal with the debt problem and avoid a crisis. Politicians from both parties should look at the programs and come up with good solutions. Last week, President Biden did something that hurt the chances of bipartisan reform. In the SOTU, he said, "I will stop anyone who tries to cut Social Security. And I will stop anyone who tries to cut Medicare." Then, he stepped up his attack on anyone who suggested that spending on entitlements be looked at for possible changes.
Biden said in the SOTU, "I ask my Republican friends to tell me what their plan is. We can talk about both plans when we get together." Then, to show what a good friend he is, the president later said that he would be any Republican's "nightmare" if they tried to cut entitlements. In Washington, "cut" means any plan to slow down even a little bit the fast growth of spending on autopilot.
Many Republicans are running for cover because they are afraid of the attacks. But Senator Ron Johnson is right when he says that both Social Security and Medicare are "ponzi schemes." Politicians from the past have made promises about the future that can't be kept, so young people will be left holding the bag. The real nightmare will be if the country can't find better leaders than the "friend" of the GOP in the White House.