According to the Congressional Budget Office, the federal debt held by the public will nearly double as a percentage of gross domestic product over the next 30 years.
In 2008, the federal debt held by the public was 39 percent of the GDP, and it has increased to 75 percent of the GDP in 2016. The CBO predicts this debt will rise to 86 percent of GDP in 2026 and to 141 percent in 2046, which would be the highest ratio of debt to the GDP ever recorded. The current record of 106 percent occurred directly after World War II.
The debt is rising due to the government spending on entitlement programs such as Social Security.
“Federal outlays for those two programs (Social Security and Medicare) made up almost 40 percent of the government’s noninterest spending, on average, during the past 10 years, compared with 16 percent 50 years ago,” the CBO report states.
The net interest costs of the federal government will lead to an increase in debt. “The first and most important (reason) is that interest rates are expected to be higher in the future than they are now, making any given level of debt more costly to finance, “ the report states. “The second reason is the projected increase in deficits: The larger they are, the more the government will need to borrow.”