The federal debt is in danger of reaching 100 percent of GDP by 2038 under current fiscal policy, according to a report released Tuesday by the Congressional Budget Office
The nonpartisan agency said the federal government recorded the largest budget deficit between 2009 and 2012 relative to the economy in more than five decades. In 2013, federal debt accounts for roughly 73 percent of economic output.
Federal debt is currently higher than at any point in U.S. history, excluding a brief period around World War II, though current tax and spending policies in response to the weak economy have shrunk the deficit to its smallest size since 2008 – roughly 4 percent of GDP.
However, it is expected to rise due to increasing interest costs and growing spending for social programs such as Social Security, Medicare and Medicaid, which are expected to account for 14 percent of GDP by 2038, double the average for the past 40 years.
"The unsustainable nature of the federal government's tax and spending policies presents lawmakers and the public with difficult choices," the CBO said in its report. "Unless substantial changes are made to the major health care programs and Social Security, those programs will absorb a much larger share of the economy's total output in the future than they have in the past."
The CBO report comes during a tense congressional session, where a group of Republicans have threatened to partially shut down the government unless Obamacare is defunded in the upcoming spending bill. For their part, Democrats have said Obamacare is not a viable option for budget cuts.
During a Monday address marking the fifth anniversary of the financial crisis, President Barack Obama called out Republicans, noting their plan does not address the budget constraints made by the sequester cuts – the main cause of sluggish economic growth and job creation.
"We've still got some changes that we've got to make and there's not a government agency or program out there that still can't be streamlined, become more customer-friendly, more efficient," Obama said.
"So I do believe we should cut out programs that we don't need. We need to fix ones that aren't working the way they're supposed to or have outlived their initial mission. We've got to make the government faster and more efficient."