The United States is poised to add trillions of dollars to the national debt over the next decade as the mounting costs of social safety net programs and growing interest expenses dig the nation into a deeper fiscal hole, according to a report released on Friday by the Congressional Budget Office.
The new budget forecasts predicted that the United States will record a $1.9 trillion budget deficit this fiscal year and that annual deficits over the next decade will total $21.1 trillion. That will be piled on to a national debt that currently exceeds $36 trillion.
By 2035, the debt as a share of the U.S. economy will rise to 118 percent, the largest in history. The debt is currently 100 percent of gross domestic product.
Although the figures show slightly smaller deficits than what the C.B.O. projected last June, thanks to higher salaries and stock values, the nation’s fiscal situation is poised to become far more precarious.
That’s because the budget office’s outlook assumes that the 2017 tax cuts that are scheduled to expire this year will actually come to an end, and that tax revenues will start to increase next year. But with President-elect Donald J. Trump set to retake the White House next week and Republicans fully in control of Congress, those tax cuts are almost certainly going to be extended.
Continuing the tax cuts is expected to cost more than $4 trillion over the next decade, according to previous estimates from the Congressional Budget Office.
Mr. Trump and his advisers have expressed concern about the national debt, but have offered few specifics about how they would shrink the shortfall.
At his confirmation hearing this week, Scott Bessent, Mr. Trump’s pick to be Treasury secretary, said he believed that the United States had a “spending problem” but did not share details about what he would advise cutting. He said that “federal domestic discretionary spending” should be adjusted and pointed to the importance of cutting waste.
“The federal government has a significant spending problem driving deficits,” Mr. Bessent said. “We must work to get our fiscal house in order.”
Mr. Bessent suggested that the country could improve its fiscal situation by creating an American sovereign wealth fund that would “leverage” U.S. assets. He has set a goal of reducing the annual budget deficit to 3 percent of G.D.P. from the 6.2 percent that the C.B.O. projects for this year.
Mr. Trump has announced plans to create a so-called Department of Government Efficiency that will look for ways to reduce wasteful spending. However, it will not have the power to actually cut spending and will instead largely operate as an advisory committee. It is unclear if its recommendations will be heeded.
The president-elect has downplayed the impact that extending his tax cuts — and adding new tax breaks — would have on the budget deficit, saying that the United States can generate tax revenue from tariffs on imports to cover the cost. Mr. Trump said this week that he would create a new “External Revenue Service” to collect the duties, which are now collected by Customers and Border Protection.
Still, Mr. Trump’s tariffs would make only a small debt in annual deficits. The Tax Foundation, a right-leaning think tank, estimates that a 20 percent universal tariff would raise $3.3 trillion from 2025 through 2034.
Other policies that Mr. Trump and Republicans are considering are also likely to increase deficits.
The C.B.O. report noted that the rescission of $20 billion from the Internal Revenue Service, which would have used the funds to go after tax cheats, would add $46 billion to deficits through 2034.
Republicans are expected to cut more funding for the I.R.S., and Mr. Bessent suggested this week that the agency should focus on using its resources to upgrade its technology rather than chase wealthy tax evaders.