Federal Debt Crisis Looms as Medicare Spending Spirals

The United States faces a looming fiscal crisis as federal debt continues to rise, driven largely by unsustainable Medicare spending. A recent report from the Congressional Budget Office (CBO) warns that federal debt held by the public will reach 156% of GDP by 2055, surpassing the post-World War II peak of 106%. Within four years, the national debt will hit 107% of GDP, signaling a dangerous trajectory for the economy.
The CBO report highlights that Medicare spending will account for over 90% of the increase in health care entitlements over the next three decades, fueled by the retirement of the baby boomer generation. Without significant reforms, Medicare and other entitlement programs will consume two-thirds of the federal budget by 2055, making the federal government increasingly insolvent.
Recent congressional efforts to address the debt through budget reconciliation measures have fallen short. While some reforms were included, they amount to half-measures that fail to address the scale of the problem. The "big, beautiful bill" is expected to worsen the situation, with tax cuts unlikely to fully offset their costs and pressure to extend expired provisions in future years.
The CBO report serves as a stark warning: the federal debt bomb is ticking, and the consequences for economic growth, interest rates, and inflation will be severe. Without bold action to slow Medicare spending and reform entitlements, the U.S. faces a future of fiscal instability and economic stagnation.

Published: 7/17/2025