The US national debt, which crossed $39 trillion earlier this year, is on track to surpass its post-World War II peak within the next decade, according to a recent analysis. The federal debt held by the public is projected to reach 137% of GDP by 2033, eclipsing the 106% mark set in 1946, as highlighted in a new report by Jessica Riedl, a budget and tax fellow at the Brookings Institution.
Medicare and Social Security Driving Deficits
The report underscores that nearly the entire $2.3 trillion increase in annual deficits between 2023 and 2036 is attributable to rising shortfalls in Social Security and Medicare. Medicare alone faces a $109 trillion cash shortfall over the next 30 years, with retirees receiving $3 in benefits for every $1 paid into the system. If these two programs were excluded, the federal budget would run a $19 trillion surplus through 2056.
‘Virtually impossible’ to balance the budget through cuts alone without addressing Social Security and Medicare, says Brookings report.
Unsustainable Borrowing Pace
The national debt has grown at a staggering rate, crossing $39 trillion in March just five months after hitting $38 trillion. Michael Peterson, CEO of the Peter G. Peterson Foundation, described the borrowing pace as unsustainable, with deficits projected to climb to 9% of GDP by 2036, a level historically seen only during crises like World War II or the 2008 financial crash.
The report warns that balancing the budget through cuts alone would require slashing every federal program by 36%, or by 69% if Social Security and Medicare are excluded. Protecting veterans’ benefits and defense spending would push the necessary cuts to 117%, effectively requiring zeroing out all other expenditures without achieving balance.