Debt as a share of the U.S. economy will reach 118% in 2035, the Congressional Budget Office said on Thursday.
As President Trump and his Republican allies race to renew a set of expiring tax cuts for families and businesses, they are confronting an increasingly urgent fiscal challenge: How to extend these policies at a time when U.S. debt is sky high, and still soaring.
The latest warning arrived Thursday from the Congressional Budget Office, a nonpartisan watchdog that offered a new assessment of the nation’s financial strains: It found the government is borrowing money at a fast and expensive clip, while confronting the rising costs of a rapidly retiring population.
Those factors prompted the C.B.O. to warn that the nation’s borrowing poses “significant risks to the fiscal and economic outlook” of the United States. By 2035, debt held by the public is expected to reach 118 percent of the country’s total economic output, rising from 100 percent this year, according to its new report. The office also projected the economy would grow more slowly, partly because of changes to the labor force.
But the assessment is still incomplete, arriving at an unpredictable moment at the start of Mr. Trump’s second term. From his disruptive reimagining of the sprawling federal bureaucracy to his recent tariffs on foreign cars and U.S. allies, the president’s economic policies carry significant ramifications for the federal balance sheet that even the nation’s budget scorekeepers cannot yet tabulate.
The vast uncertainties include the fate of soon-expiring federal tax cuts on families and businesses, which Mr. Trump enacted while in the White House in 2017. The budget analysis released Thursday presumes these policies expire, as planned, helping to improve federal tax revenues and the nation’s overall debt load. But the president seeks to renew and expand the tax cuts as part of a package that could reach into the trillions of dollars.
To defray its cost, Republican lawmakers have started identifying spending cuts and other sources of revenue. But G.O.P. leaders still hope to offset some of the price tag by relying on a special accounting trick, which could make the legislation appear to be free.