The most recent long-term forecasts from the Congressional Budget Office underscore the severe unsustainability of our current fiscal path. This statement may not seem surprising, but it prompts the question: “How did we end up here?”

You might encounter some misguided explanations.

Based on recent data from the Treasury Department, the total public debt has now reached $29 trillion (yes, that’s “trillion,” with 12 zeros).

The CBO predicts a substantial increase in the budget deficit, expected to climb to 7.3 percent of GDP in 2055. Concurrently, public debt is projected to hit record highs in 2029 and continue growing to 156 percent of GDP – essentially 1.5 times the U.S. economy’s size – over the forthcoming three decades.

Before delving into the crucial figures, it’s worth noting that even these predictions are quite optimistic. They are premised on the assumption that the 2017 tax cuts will expire, there are no economic catastrophes, global pandemics, or significant wars. Further, CBO has been revising its projections in recent years and considerably underestimating the actual growth of debt and interest payments over time.

CBO has also recently provided estimates regarding when the Treasury will reach the debt ceiling – the point at which the government exhausts its borrowing capability through “extraordinary measures.” Although the forecast indicates that the government has adequate funds to cover expenses until August or September, heightened borrowing costs could deplete these funds as soon as late May.

In sum, CBO has validated what we have understood for a while: Our fiscal state is dire and will notably worsen in the ensuing years and decades.

How exactly did we get to this point? Let’s start with a false answer. Several policy research organizations have contended that the Bush and Trump tax reductions are responsible for over 90 percent of the debt ratio’s trajectory shift. Similarly, some policymakers have attributed the largest share of the budget deficit to the Trump tax cuts.

CBO’s current projections anticipate federal outlays to amount to 23.3 percent of GDP this year, with revenues projected at 17.1 percent. Compared to historical averages of 20.5 percent and 17.3 percent, respectively, these figures establish a historical, neutral budget balance point of 18.9 percent of GDP.

By utilizing this benchmark, it is possible to attribute 71 percent of the 2025 deficit to spending policy choices and 29 percent to tax policy choices. Essentially, our current deficit challenge is linked to spending expansion, with a relatively smaller yet still significant impact from tax revenue shortfalls.

Concerning the nation’s long-term structural deficit, the same parameters reveal that once again, spending policy choices play a predominant role.

Sixty-seven percent of the 2050 deficit stems from the growth in mandatory spending programs – mainly imbalanced entitlement spending – while the remaining 33 percent reflects the rise in interest payments on the debt. The most substantial mandatory spending program driving this trend significantly is Medicare, which is anticipated to expand to nearly 7 percent of GDP over the upcoming 30 years.

While assigning blame for the escalating debt ratio to tax reductions may be a prevalent narrative, budget forecasts and historical facts assertively direct attention elsewhere. Policymakers intent on addressing this issue must be prepared to tackle the formidable challenge of mitigating the growth of these programs – all while preserving services for predominantly elderly populations reliant on them.

Some potential measures could include transforming Medicare into a cash-transfer program akin to Social Security. This shift would entail substituting the existing system of intergenerational transfers with direct investments by workers in personal accounts for future healthcare needs.

Another alternative could be suppressing Medicare expenditures by capping increases in per-enrollee spending to GDP growth.

Policymakers could also explore other ideas for reforming entitlement programs, like tying the Social Security retirement age to life expectancy and revising its cost-of-living adjustment formula to the “chained consumer price index.” This approach would more accurately represent retirees’ changing cost dynamics over time. They might also deliberate on transitioning Medicaid toward a framework centered on block grants or per capita caps.

Reviving sustainability in federal budgeting will demand more than merely questioning tax policy alterations. Recent figures emphasize once more that it will necessitate political resolve to curtail the expansion of entitlement spending.

Jack Salmon currently serves as a research fellow at the Mercatus Center at George Mason University.