The Long-Term Budget Outlook: 2025 to 2055

This report presents the Congressional Budget Office's projections of what the federal budget and the economy would look like over the next 30 years if current laws generally remained unchanged. Those long-term projections are based on the agency's January 2025 demographic projections (which reflect information, laws, and policies as of November 15, 2024), economic projections (which reflect laws, policies, and economic developments as of December 4, 2024), and 10-year budget projections (which include the effects of legislation enacted as of January 6, 2025). The projections do not reflect the effects of administrative actions taken or judicial decisions made after those respective dates, including actions and decisions affecting immigration, tariffs, and other policy areas.

The Federal Budget

Debt held by the public, boosted by large deficits, reaches its highest level ever in 2029 (measured as a percentage of gross domestic product, or GDP) and then continues to grow, reaching 156 percent of GDP in 2055. It remains on track to increase thereafter. Mounting debt would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel constrained in their policy choices.

The deficit remains large by historical standards over the next 30 years, reaching 7.3 percent of GDP in 2055. That amount results from rising interest costs and sustained primary deficits, which exclude net outlays for interest and average 0.3 percent of GDP more over the next 30 years than they did over the past 50 years.

Outlays, which are already high by historical standards, rise over the 2025–2055 period, reaching 26.6 percent of GDP in 2055. Rising interest costs; spending for the major health care programs, particularly Medicare; and spending for Social Security, especially over the next decade, drive that growth.

Revenues increase over the next few years, largely because certain provisions of the 2017 tax act are scheduled to expire. Thereafter, they generally rise, reaching 19.3 percent of GDP in 2055, as growth in real income—that is, income adjusted to remove the effects of changes in prices—boosts receipts from the individual income tax.

Changes in CBO's Budget Projections Since March 2024

Federal debt held by the public in 2054 is now projected to be 12 percent of GDP less than it was projected to be in last year's report, and the deficit is now projected to be 1.3 percent of GDP less. Lower spending, particularly for net interest costs and Medicare, and higher revenues in the current projections contribute to the lower projected debt and smaller projected deficits.

The U.S. Economy

Population growth, which has a significant effect on the economy, is slower over the next 30 years than it was over the past 30 years. Without immigration, the U.S. population would begin to shrink in 2033.

Economic growth is slower over the next three decades than it was over the past three decades. The slowdown in the growth of output results from slower growth in the size and productivity of the labor force; the latter stems partly from increased federal borrowing.

Inflation slows through 2027 to a rate that is consistent with the Federal Reserve's long-term goal of 2 percent and then remains at rates that are consistent with that goal from 2027 to 2055.

The interest rate on 10-year Treasury notes stays close over the next three decades to what it was, on average, over the past 30 years, reflecting upward pressure from increases in federal borrowing and downward pressure from slowdowns in the growth of the labor force.

Changes in CBO's Economic Projections Since March 2024

The economy is now expected to grow more slowly, on average, over the next 30 years than CBO projected last year. That decrease stems mainly from slower growth of private investment and consumer spending over the next decade and slower growth of the labor force over the last decade of the projection period. The interest rate on 10-year Treasury notes is also lower, on average, in the current projections.