The United States' public debt is on track to rise to $54 trillion over the next decade, the Congressional Budget Office said yesterday. But raw numbers don't tell you much about whether a given level of debt is burdensome or not.

• The rubber-meets-road test of sustainability is how much of the nation's resources go to service that debt every year. And the news is gloomy.

Why it matters: The U.S. government is on track to face debt service costs that, starting in 2026, will be a modern record as a share of the economy — and they are forecast to rise from there, pinching other national priorities.

• The government already spends more money servicing the national debt than it does on Medicaid, and the number is on track to surpass defense spending soon.

By the numbers: Debt service costs were 1.2% of GDP as recently as the mid-2010s and 1.8% in 2019 just before the pandemic. But the combination of higher interest rates and the swell of debt for pandemic relief spending has pushed that much higher.

• Debt service amounted to 2.4% of the economy last year, CBO said, and is poised to rise to 3.1% this year and 3.9% in 2034.
• In contrast, the previous record net interest cost for the U.S. government in CBO data that goes back to 1962 was 3.2%, reached in 1991.
• In dollar terms, net interest is set to cross the $1 trillion per year mark in 2026 and $1.6 trillion in a decade.

What they're saying: "You can think of the increase in net interest payments as two-thirds resulting from higher rates and one-third as a result of the amount of debt," CBO director Philip Swagel told reporters yesterday.

Of note: Those projections are premised on the Fed's policy interest rate moving downward over the coming years, settling below 3% late in this decade (they're currently near 5.5%).

Flashback: The last time the government's interest costs were anything near this level as a share of the economy, in the late 1980s and early 1990s, deficit reduction became a central political issue and bipartisan cause.

• In the 1990s, President George H.W. Bush signed a bipartisan deficit reduction deal that, among other things, increased the top income tax rate to 31% from 28%.
• President Bill Clinton's first budget act in 1993 raised taxes further, pushing the top rate to 39.6%.
• Deficits fell sharply through the 1990s and flipped into a surplus in 1998.

Yes, but: Politics now are very different than they were in the early 1990s, when both parties had many deal-making moderates in their midst and fiscal deficits were a front-of-mind political issue.

• It is less clear how today's voters, and the members of Congress who represent them, will react to the surge of debt service costs over the next few years.

There was a stunning update to the CBO's economic projections that you might have missed.

What's new: The nonpartisan agency now expects GDP over the next decade to be $7 trillion above what they anticipated last year, and revenues $1 trillion greater — resulting in a smaller deficit than previously estimated.

• The overwhelming reason: More people are expected to be working, thanks to higher rates of immigration.

By the numbers: The CBO projects the labor force in 2033 will grow by 5.2 million people, "mostly because of higher net immigration," Swagel told reporters.

• "More people, more workers, a larger economy — and from there, there are budgetary effects," he said.

The backdrop: Economic policymakers have recently acknowledged that the rebound in immigration to rates closer to pre-COVID levels has helped fill the gap between the high demand for workers and the supply of them.

Fed chair Jerome Powell told "60 Minutes" in an interview that aired Sunday that over time, the "U.S. economy has benefitted from immigration."

• "[F]rankly, just in the last year, a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era," Powell said.

What to watch: Swagel noted that the agency is unsure whether the current immigration surge will stick, noting that future legislation could potentially curb the flow of people into the U.S.

• "It's hard to know, sitting here today, how long this immigration surge lasts," Swagel said. "It's a key source of uncertainty in our projections."