This afternoon, I will brief the press, delivering the following remarks.

Thank you for joining me. Earlier today, we released The Budget and Economic Outlook: 2025 to 2035. The full document is available on our website along with a one-pager showing key numbers. I’ll talk first about our projections for the federal budget, and then about those for the economy.

The Budget

From 2025 to 2035, debt rises as increases in spending on Social Security, Medicare, and interest payments outpace growth in revenues. Federal debt held by the public rises from 98 percent of GDP at the end of 2024 to 118 percent in 2035. We project that in 2029, debt will surpass its high in 1946 of 106 percent of GDP. Social Security’s Old-Age and Survivors Insurance Trust Fund will be exhausted in 2033, the same year as we reported last June.

The projected federal budget deficit in 2025 is $1.9 trillion, and it grows to $2.7 trillion by 2035. Measured in relation to economic output, the deficit over that period is about 50 percent larger than its historical average over the past 50 years. These deficits are especially large given the unemployment rates that we are forecasting; historically, such rates—unemployment below 4.5 percent— have occurred in years with much smaller deficits.

Net interest costs are a major contributor to the deficit. In the coming years, net interest costs are projected to be similar to the amounts of discretionary spending for either defense or nondefense activities.

The cumulative deficit over the 2025–2034 period is smaller by $1 trillion, or 4 percent, than it was in our June 2024 projections. The largest contributor to that decrease was growth in projected collections of individual income taxes. Our current economic forecast includes projections of more taxable income, mainly stemming from revisions to data about the size of the economy that carry through the 10-year projection period.

All of our projections reflect the effects of the tax changes scheduled to take place at the end of the year under current law. In our estimation, those tax changes increase revenues, reduce federal borrowing, and make more funds available for private investment. At the same time, the tax changes reduce the supply of labor, diminish incentives in the tax code for savings and investment, and reduce overall demand for goods and services.

The Economy

In our projections, real GDP growth moderates from an estimated 2.3 percent in 2024 to 1.9 percent in 2025 amid higher unemployment. It then averages 1.8 percent from 2026 to 2035.

Since June 2024, when we last published our full economic forecast, we have raised our projections of the average unemployment rate and inflation for 2025 and 2026. In later years, our current and previous forecasts are generally similar.

Phillip L. Swagel is CBO’s Director.