Caring for an entire population is expensive—caring for an aging population even more so. This is the conundrum facing the U.S. government over the coming decades, with the number of people age 65 and older projected to increase to 82 million by 2050—a 42% increase compared with the early 2020s.
In 2030, the U.S. government will spend the equivalent of 6% of the nation’s GDP on major health care programs, according to the latest reporting from the Congressional Budget Office (CBO), and the equivalent of 5.6% of GDP on Social Security initiatives.
And these major, mandatory expenses will also contribute to growing deficits in the U.S. The CBO report shows that, come 2030, the annual deficit will be worth roughly 5.9% of GDP, on par with provisions set aside for health and Social Security programs, and well ahead of calls to reduce deficits to 3% of GDP.
Unsurprisingly, the costs racked up by the government, and the damage to its bottom line, move up in tandem. The new budget outlook, released yesterday, shows health care spending (Medicaid, Medicare, the Children’s Health Insurance Program, and premium tax credits for health insurance established under the Affordable Care Act) will stay roughly the same until the end of the decade, then steadily creep up until it reaches 8% of GDP by 2050. Social Security payments follow a similar, but less steep trajectory, increasing from 5.2% of GDP in 2025 to 5.8% by 2050.
In turn, deficits as a portion of GDP grow from 5.8% this year to 6.9% by 2040.
While the increases in percentage terms seem marginal, extrapolated across the economy the sums are huge. The CBO wrote earlier this month that the federal deficit for 2026 will be $1.8 trillion. Next year, that figure will be approximately $1.9 trillion, and by 2036 it spikes to $3.1 trillion.
The question of debt has steadily crept up the agenda over the past few years, with the Trump administration pitching an array of methods to rebalance the books—from tariffs to visa revenues. Recently, however, the debate has turned confrontational—particularly between the White House and the nonpartisan Committee for a Responsible Federal Budget.
Treasury Secretary Scott Bessent this weekend said the committee’s president, Maya MacGuineas, should be “ashamed” for querying how the White House will replace revenues potentially lost as a result of last week’s Supreme Court decision, which ruled some tariff implementations as unlawful. MacGuineas hit back: “With debt approaching record levels as a share of the economy and interest payments surging past $1 trillion, we hope policymakers in both parties are ready to begin taking our budget deficits seriously. Doing so will require not only replacing lost tariff revenue, but pursuing significant additional spending cuts and/or revenue and bringing deficits down to at least 3% of GDP.”
Interest payments
There’s also the matter of servicing the debt. There’s been a lot of talk about the eye-watering scale of AI investment in the past 18 months: The spending has been so huge that it has propped up growth in the U.S. economy, adding to analyst concerns of a bubble.
But even the spending expected on AI this year pales in comparison to the bill that will land on the desk of the Treasury Secretary come 2030 for interest on the debt alone.
The CBO estimates net interest outlays on the budget deficit will equate to 3.8% of GDP by 2030. For comparison, Citadel Securities estimates the $650 billion in AI capex (capital expenditures and business spending needed to acquire, upgrade or maintain assets) this year is equivalent to around 2% of GDP.
A year later, in 2031, net interest outlays alone will account for 4% of the nation’s entire GDP. By 2036, the Treasury will be paying out more than $2.1 trillion a year on its debt burden, equal to 4.6% of GDP.
The CBO’s long-term budget outlook data from 2026 to 2056, also highlighted that by 2030, federal debt held by the public will hit 108% of GDP. By 2040, that hits 129% of GDP and by 2056, 175% of GDP. This is lower than the total debt-to-GDP ratio, which hit 124% in 2025, per Treasury data.
The debt-to-GDP ratio is the barometer that economists are most concerned with, as it reflects the nation’s economic growth relative to its debt burden and, hence, its ability to keep paying its debts. The likes of JPMorgan CEO Jamie Dimon are watching this data, warning that at some point, investors may lose faith in the U.S.’s ability to pay its interest and begin to demand higher returns as a result of the risk. So far, there’s no evidence this is happening: 30-year Treasuries are still sitting comfortably below 5%, with 10-year Treasuries around 4%.
