Looking yet further out, it is apparent that, absent significant policy shifts, budget pressures resulting from the aging of the U.S. population and fast-rising health-care costs will continue to push the federal debt ratio higher in coming decades.
The dashed line in exhibit 2 shows the Congressional Budget Office’s long-term projection of the debt-to-GDP ratio through 2035 under current policy settings, including the effects of the Budget Control Act. It is crucial that the federal budget be put on a sustainable long-run trajectory, and we should not postpone charting that course.