WASHINGTON — The Congressional Budget Office (CBO) has released projections indicating that over the next 30 years, sluggish population growth combined with rising government expenditures will contribute to slowed economic expansion. The CBO’s long-term budget and economic outlook, covering the period from 2025 to 2055, forecasts that the debt held by the public could surge to 156% of the country’s gross domestic product (GDP) by 2055. This marks a decrease from the previous estimate in March 2024, which suggested debt levels could rise to a staggering 166% of GDP by 2054.
Despite this projected decrease, it is not necessarily good news. The combination of decelerated population growth and unchecked government spending points to weaker economic performance over the next few decades compared to last year’s projections. The declining birth rates contribute to the U.S.’s increasing reliance on immigrant workers to maintain economic growth. The CBO report highlights that without immigration, the U.S. population would begin to diminish by 2033.
The report operates on the assumption that specific laws poised to expire, including parts of Trump’s 2017 tax overhaul, will indeed lapse. However, both the White House and GOP lawmakers have expressed intentions to renew and potentially expand those tax cuts, along with proposing reductions in federal spending and enhancements in revenue through taxes on imports.
This sets a complex scene for Treasury Secretary Scott Bessent, who confidently claims that the issues surrounding debt, spending, and economic growth can be addressed by the current administration. Bessent advocates for a “3-3-3” strategy aimed at reducing the federal budget deficit to 3% of GDP, escalating annual GDP growth adjusted for inflation to 3%, and attaining the production equivalent of 3 million additional barrels of oil per day by 2028.
The treasury secretary has criticized the CBO’s projections as being unreliable. Bessent stated to CNBC earlier this month, that his decades-long career in investment taught him about the “craziness” of the CBO’s scoring system, implying a skepticism that the tariffs will receive due consideration in their economic assessments.
The CBO’s cautionary notes on population growth, however, pose challenges to certain policy objectives of the Trump administration, particularly those regarding mass deportations. Some officials attribute high inflation rates to immigrants, claiming they exacerbate housing shortages and limit job opportunities for U.S. citizens.
A shrinking population may have severely detrimental impacts on the economy as growth relies on increasing the workforce and enhancing productivity. A decline in population figures could result in stagnant living standards, complicate the repayment of national debts, and challenge the funding of essential programs like Social Security, which heavily relies on payroll taxes.
This report lands as the U.S. approaches its statutory debt ceiling, or the so-called X-date, when financial resources could fall short to meet national obligations. Without an agreement between Congress and the White House, the X-date could arrive as early as August. Both the CBO and the Bipartisan Policy Center have put forth estimates that the U.S. might hit its debt limit as soon as mid-summer.
Michael Peterson, the CEO of the Peter G. Peterson Foundation, which tracks federal debt among other things, remarked that “although this forecast is unfavorable, it may actually represent an ‘optimistic scenario’ given that lawmakers are currently contemplating adding trillions in tax cut extensions, further exacerbating the national debt.”