The CBO forecast in June that federal spending on the major health care programs and Social Security will climb to almost 16 percent of GDP in 25 years, from 10 percent now, due to an aging population and rising medical costs. Such a percentage increase would be equivalent to about $850 billion in today’s dollars, the non-partisan agency added in a report.

Debt Explosion

Lawmakers focusing on deficit-reduction over the next 10 years overlook the explosion of U.S. debt lurking just beyond that time horizon as the population gets older, according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co.

“The 10-year focus is misleading,” said New York-based Feroli, a former member of the Federal Reserve’s forecasting team. “In the process, they’re missing the bigger picture. You’re not going to get the correct medicine unless you get the correct diagnosis.”

Obama said Jan. 14 he is “open to making modest adjustments to programs like Medicare.” He insisted, though, on a balanced strategy, that couples tax increases with spending cuts, and said he wouldn’t negotiate with Republicans under the threat that they won’t increase the government’s debt ceiling.

McConnell rejected that approach, saying that further tax increases are off the table. “The president and his allies need to get serious about spending,” the Kentucky lawmaker said the same day.

Borrowing Limit

The Treasury reached its statutory borrowing limit on Dec. 31 and is using “extraordinary” measures to pay for the government. Those measures will work only until mid-February to early March, Treasury Secretary Timothy F. Geithner said in a Jan. 14 letter to congressional leaders.

The debt limit has been raised periodically since its creation in 1917 during the presidency of Woodrow Wilson. Since 1960, Congress has raised or revised the limit 79 times, including 49 times under Republican presidents. The U.S. never has defaulted on its obligations.

Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, haven’t shown alarm over the political fight in Washington.