This week, the Congressional Budget Office (CBO), Washington’s official legislative scorekeeper, released its first report on the state of the U.S. economy and federal budget in the new 118^th Congress. This report was much anticipated in Washington because its economic assumptions and figures on spending create the baseline against which all legislation is evaluated. And while the partisan press releases go flying (extolling an overly rosy view from one camp and predicting disaster from the other), the truth is the report is a sobering evaluation of the challenges we face. It also should be a wake-up call for lawmakers to stand up and do the job they all just asked us to elect them to do.

If you are interested in the full 101-page analysis, and the accompanying data, it is here – “The Budget and Economic Outlook: 2023 to 2033.” But for a few highlights, please read on.

First, the FY2023 budget deficit is projected to be $1.4 trillion. This marks the fourth consecutive year of trillion-dollar annual deficits. And annual deficits are projected to average $2.0 trillion 2024-2033. Washington has seemingly accepted that trillion-dollar deficits are the new normal. But they shouldn’t be. Not just because of the political difficulties they raise (remember we’ve already met our debt ceiling), but because debt that grows faster than the economy can be especially problematic.

Deficits and debt as a share of economic output are ballooning. The deficit in 2023 is projected to be 5.3 percent of Gross Domestic Product (GDP), growing to 6.9 percent in 2033. These levels are much higher than the 3.6 percent GDP average over the past 50 years. These rising deficits lead to an increase in overall debt compared to GDP. Debt held by the public is projected to increase from $24.3 trillion (97.0 percent of GDP) in 2022 to $46.4 trillion (118.2 percent of GDP) in 2033. Add in the money the government owes itself for Social Security and other “trust funds” that used to run an annual excess, and those numbers rise to $30.8 trillion (123.3 percent of GDP) currently to $52.0 trillion (132.3 percent of GDP) in 2033. Debt levels this high are something our country, and most others, have not experienced before. The belief that the government will still be able to cheaply borrow money to continue running annual deficits, is just that, an untested belief.

A second cold splash of reality in this report is the degree to which debt service is a driver of increased annual deficits. Debt service is simply the interest the government pays to creditors on the debt already accumulated. So, don’t be fooled by the rhetoric; it’s not the cost to borrow money to increase spending on the military, expand Medicare benefits, or respond to a natural disaster. It’s just what it costs to pay the interest on debt from past spending decisions. This is going up.

The cost of debt service in FY2022 was $475 billion. That’s $475 billion spent just on the interest on our nation’s credit card. It’s projected to rise every year, exceeding Pentagon spending by the end of the decade and reaching $1.429 trillion by 2033 for a ten-year cost of $10.5 trillion. It’s shocking.

It’s important to know CBO doesn’t predict the future. The baseline includes assumptions. Assumptions that don’t always pan out. Just since CBO’s last update in May, the projected 2023 budget deficit has increased $400 billion. The projected ten-year deficit increased $3 trillion. These revisions upward were due in large part to the fact both inflation and interest rates were higher in the latter half of 2022 (and projecting forward) than CBO anticipated last May.

Another big caveat is CBO can’t predict what lawmakers will do. Instead, CBO assumes current law will continue as is. So “temporary” tax cuts expire (they won’t, at least not in whole). Farm Bill programs won’t cost a lot. Pandemics don’t occur. Lawmakers don’t respond to natural disasters with “emergency” (aka unbudgeted) spending. And brand-new initiatives (Medicare Part D, Obamacare, 2017 tax cut bill) can’t be predicted. Finally shocks to the system, big and small, can’t be factored in. The bank bailouts and American Recovery and Reinvestment Act in response to the 2008 collapse of the housing bubble, COVID-19 pandemic assistance, President Trump’s trade war, and a Russian invasion of Ukraine are just a few examples of events not contemplated when CBO put together past reports.

Another reality? Spending on old age supports is growing. The baby boomers have shifted from working and contributing taxes into Social Security and Medicare to drawing on these trust funds. This coupled with rapidly rising health care costs is structurally unsustainable. This must be addressed. Medicare Trustees project part of Medicare will be insolvent in 2028 (meaning costs will exceed revenue and carry-over balances in the trust fund and the program will be unable to pay the full costs). Other parts of Medicare will increasingly draw on general revenues. This needs to be addressed and demagoguery won’t get it done.

In the end the report should be a sobering wakeup call for lawmakers to do the job they auditioned for.