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Projected annual deficits of $1 trillion and more for the nextdecade will be driven by an increasingly aging society and thegrowing costs of Social Security and Medicare, according to theCongressional Budget Office's Budget and Economic Outlook for thenext decade.

"The number of people age 65 or older is now more than twicewhat it was 50 years ago, and that number is expected to rise byabout one-third by 2030," CBO's report says.

Social Security's outlays in 2019 were about $1.04 trillion. Thecosts are projected to surpass $1.5 trillion by2026, and reach more than 1.92 trillion by 2030. The Old Age andSurvivors Insurance program—Social Security's main pension forretirees—will cost $1.71 trillion in 2030. TheDisability Insurance program will cost $213 billion.

As more retirees move to Medicare, its cost too will explode,ultimately overtaking Social Security's OASI as the most expensivemandatory spending program in the federal budget.

Medicare cost $775 billion in 2019, and is projected to grow to$1.2 trillion by 2025, and $1.72 trillion by 2030.

Beyond the growth in retiring participants, health care costsper beneficiary are also expected to grow, as the volume ofconsumption will increase health care inflation.

In 2019, the payroll taxes that fund Social Security andMedicare totaled $1.2 trillion. Outlays for Social Security andMedicare were about $1.8 trillion.

Payroll taxes now account for 5.9 percent of GDP, a ratio CBOexpects will hold over the next decade.

But the deficit from social insurance programs will balloon.

By 2030, CBO projects payroll taxes will generate about $1.9trillion. The cost of Social Security and Medicare will be $3.65trillion.

Outlays for Social Security, Medicare, and the other federalhealth programs account for more than 90 percent of the projectedgrowth in mandatory spending through 2030, according to theCBO.

In 1970, Social Security's outlays were 2.8 percent of GDP, and4.4 percent in 1995. Medicare and other federal health insuranceprograms accounted for 0.8 percent of GDP in 1970, and 3.2 percentin 1995.

CBO is projecting slowing but positive GDP growth over the nextdecade. The agency estimates it will be 2.2 percent in 2020, andwill subsequently average 1.7 percent throughout the nextdecade.

The $1 trillion-plus annual deficits projected over the next 10years will grow the federal debt from 81 percent of GDP to 98percent in 2030, the highest since World War II.

Under current law, the federal debt is projected to be 180percent of GDP by 2050, according to the CBO.

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