The looming budget cliff, in four charts

The looming budget cliff, in four charts
The looming budget cliff, in four charts

Failing to address the debt issue could weaken U.S. international leadership by making the country more dependent on outside creditors, according to the report. It could also increase the chances of a fiscal crisis and reduce the country's ability to address a crisis if one occurs, as well as reducing saving and income and raising the costs of borrowing.

"Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy," the office wrote in the report.

Demographic shifts account for much of the future risk of an unsustainable federal debt. Overall, population growth is slowing, and the population is getting older. The CBO uses fertility, immigration and mortality estimates to project the future makeup of the country. Today, about 15 percent of the population is 65 or older, but by 2047 that figure is expected reach 22 percent.

The aging population will both shrink the workforce participation rate and put strain on mandatory Social Security and Medicare spending. Already, those and other major health care programs account for 54 percent of federal spending (excluding interest), but by 2047 they would reach 67 percent. Individual income taxes are also expected to rise, but not enough to make up for the deficit caused by those programs.

CNBC

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