CBO: US Federal deficits and debt to worsen over next decade | Government News
CBO Projects Rising Deficits and Debt in Long-Term Outlook
The nonpartisan Congressional Budget Office (CBO) released its 10-year fiscal outlook on Wednesday, revealing a concerning trend of worsening federal deficits and escalating debt in the United States. The report attributes these trends mainly to increased spending on Social Security, Medicare, and debt service payments.
Compared to last year’s analysis, the CBO noted a modest decline in the fiscal outlook. In fiscal year 2026, the deficit is projected to be approximately 5.8% of Gross Domestic Product (GDP), a figure consistent with the previous year’s deficit of $1.775 trillion recorded in fiscal 2025.
Over the next decade, the CBO forecasts an average deficit-to-GDP ratio of 6.1%, peaking at 6.7% by fiscal year 2036. This figure significantly exceeds Treasury Secretary Scott Bessent’s objective of reducing it to about 3%.
The report incorporates several major developments from the past year, including the Republicans’ tax and spending measure known as the “One Big Beautiful Bill Act,” the implementation of higher tariffs, and heightened immigration enforcement policies. Additionally, these changes have led to a projected 2026 deficit that is about $100 billion higher than previously estimated, contributing to a total increase of $1.4 trillion in deficits from 2026 to 2035. Public debt is expected to rise from 101% of GDP to 120%, reaching levels not previously recorded.
Although higher tariffs are anticipated to boost federal revenue by $3 trillion, they are also expected to contribute to inflationary pressures between 2026 and 2029. The implications of rising debt are significant, as the cost of servicing this debt competes with funding for essential government services such as infrastructure and education, which are critical for future economic growth.
The CBO’s projections suggest that inflation will not align with the Federal Reserve’s target rate of 2% until 2030. They also reveal a stark divergence from the Trump administration’s forecasts, which predict GDP growth of 3-4% in 2026. In contrast, the CBO estimates a more modest growth rate of 2.2% for that year, declining to an average of around 1.8% for the remainder of the decade.
These forecasts assume that current tax and spending policies, as well as tariff regulations, will remain unchanged for the next ten years. The federal government’s fiscal year begins on October 1.
While the introduction of enhanced investment tax incentives and larger individual tax refunds is expected to provide a temporary uplift in 2026, the CBO warns that such benefits will be mitigated by the negative impacts of increased fiscal deficits and reduced immigration, which could limit labor force growth.
Jonathan Burks, executive vice president of economic and health policy at the Bipartisan Policy Center, noted the unprecedented nature of large deficits in a growing, peacetime economy while emphasizing that policymakers still have the opportunity to alter this trajectory.
Lawmakers Respond to Debt Concerns
In light of rising federal debt and deficits, lawmakers have largely resorted to targeted spending caps, debt limit suspensions, and “extraordinary measures” when approaching statutory spending limits. However, these strategies have often coincided with new spending initiatives or tax policies that exacerbate deficit levels.
During the early stages of his second term, President Trump announced the formation of a new “Department of Government Efficiency,” aiming to achieve a balanced budget by cutting $2 trillion in waste and fraud. Yet, independent analysts estimate that the department has only managed cuts between $1.4 billion and $7 billion, primarily through workforce reductions.
Michael Peterson, CEO of the Peterson Foundation, emphasized the urgency of the CBO’s latest projections as a warning for political leaders about the nation’s troubling fiscal path. He highlighted that voters in the upcoming election year will likely recognize the connection between rising debt and their personal economic situations, urging that stabilizing debt should be a key topic in campaign discussions.
