Debt limit deal is in place, but budget deficit is still a multi-decade challenge for US government

WASHINGTON (AP) — Even with the new spending restraints in the debt limit deal that cut borrowing by $1.5 trillion, the U.S. government's deficits are still on course to keep climbing to record levels over the next few decades.

The projections are a sign that the two-year truce between President Joe Biden and House Speaker Kevin McCarthy, R-Calif., might be only a pause before a far more wrenching set of showdowns over the federal budget. The Congressional Budget Office said Tuesday that the agreement would reduce spending by $1.3 trillion and interest payments by $188 billion over 10 years. But that sum is too modest to fully offset the growing costs of Social Security, Medicare and Medicaid.

Both Biden and McCarthy ruled out any cuts to Social Security and Medicare, two programs that benefit older voters, before their teams even began their budget talks. That omission reflects the politics around two popular programs as Democrats and Republicans prepare for next year's presidential election.

It also means the agreement finalized on Sunday keeps the risk of ever-escalating debt on the table, setting up the possibility of another bruising battle when the debt limit needs to be raised again in 2025.

“You should think of this as one step,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget. “The question is, can they take the next step after that?”

Lawmakers know there are difficult choices ahead and that the only way through them likely involves some combination of deep spending cuts, broad tax hikes and major changes to the retirement income and health care programs that consume an ever-growing share of federal spending.

Mandatory spending — which includes Social Security, Medicare and Medicaid — already account for the...