The Congressional Budget Office found that the federal deficit and debt will worsen over the next decade
WASHINGTON (AP) — The nonpartisan Congressional Budget Office’s 10-year forecast sees the long-term federal deficit widening and debt rising, driven largely by increased spending, particularly on Social Security, Medicare and debt service payments.
Compared to the Congressional Budget Office’s analysis at this time last year, the fiscal outlook has deteriorated modestly.
Key developments over the past year were taken into account in the latest report, released Wednesday, including Republican tax and spending measures known as the “Big Beautiful Bill Act,” higher tariffs, and the Trump administration’s crackdown on immigration, which includes deporting millions of immigrants from the U.S. mainland.
As a result of these changes, the projected deficit in 2026 will be about $100 billion higher, and the total deficit from 2026 to 2035 is about $1.4 trillion larger, while the debt held by the general public is expected to rise from 101% of GDP to 120% – exceeding historical highs.
Notably, the Congressional Budget Office says higher tariffs partially offset some of these increases through a $3 trillion increase in federal revenue, but that also comes as inflation rises from 2026 to 2029.
High debt and debt servicing are important because repaying investors borrowed money crowds out government spending on basic needs such as roads, infrastructure and education, enabling investment in future economic growth.
Congressional Budget Office projections also indicate that inflation will not reach the Federal Reserve’s target rate of 2% until 2030.
“The large deficit is unprecedented for a growing peacetime economy,” said Jonathan Birx, executive vice president for economic and health policy at the bipartisan Policy Center, although “the good news is there is still time for policymakers to correct course.”
“We encourage lawmakers to work together to explore options to raise revenues, reduce spending, and slow the growth of key cost drivers,” Birx said. “Congress and the administration must seize the opportunity to act now before the list of available options becomes even more painful.”
Lawmakers have recently addressed rising federal debt and deficits primarily by setting spending targets and suspending debt limits, as well as deploying “extraordinary measures” when the United States is close to reaching the legal limit on spending, although these measures have often been accompanied by broad new spending or tax policies that maintain high deficit levels.
President Donald Trump at the beginning of his second term deployed the Department of State Efficiency, which set a goal of balancing the budget by cutting $2 trillion in waste, fraud, and abuse. However, budget analysts estimate that the Department of State Efficiency cut between $1.4 billion to $7 billion, largely through workforce layoffs.
The latest budget projections from the Congressional Budget Office “serve as an urgent warning to our leaders about America’s costly fiscal path,” said Michael Peterson, CEO of the Peterson Foundation.
“This election year, voters understand the connection between high debt and their personal economic situation. Financial markets are watching. Stabilizing our debt is a key part of improving affordability, and should be a key component of the 2026 campaign conversation.”
