WASHINGTON (AP) — A new ten-year outlook from the nonpartisan Congressional Budget Office (CBO) has highlighted worsening long-term federal deficits and increasing national debt, trends largely attributed to growing federal expenditures, particularly on Social Security, Medicare, and debt servicing.
This latest CBO analysis reflects a modest deterioration in the fiscal outlook compared to the findings released a year ago.
Several key developments from the past year have been integrated into this latest forecast, including the Republicans’ new tax and spending initiative termed the One Big Beautiful Bill Act, the implementation of higher tariffs, and immigration policy changes from the Trump administration that have impacted millions of immigrants.
As a result of these factors, projections for the 2026 federal deficit have risen by approximately $100 billion, while the anticipated total deficits for the years 2026 through 2035 have swelled by $1.4 trillion. The ratio of debt held by the public is expected to climb from 101% of the GDP to a staggering 120%, surpassing historical records.
Interestingly, the CBO has noted that these higher tariffs will contribute to an increase in federal revenue by $3 trillion, although this will likely accompany a rise in inflation rates from 2026 through 2029.
These rising debt levels are critical as they crowd out essential public funding for infrastructure, education, and other basic needs that are vital for fostering future economic growth.
Furthermore, the CBO projects that inflation will not meet the Federal Reserve’s target rate of 2% until at least 2030, indicating prolonged economic pressures ahead.
Jonathan Burks, a key figure at the Bipartisan Policy Center, expressed concern over the unprecedented levels of deficits amid a growing economy, although he noted there remains an opportunity for policymakers to re-evaluate fiscal strategies.
Burks urged lawmakers to collaborate on finding solutions to raise revenue, reduce spending, and mitigate the escalating costs of major programs.
As federal legislators have tackled the rising debt mainly through temporary spending restraints and debt cap suspensions, these measures have only been accompanied by large-scale spending or tax reforms that maintain elevated deficit levels.
In an attempt to restore fiscal integrity during his second term, President Trump initiated a Department of Government Efficiency with the goal of balancing the budget by cutting $2 trillion, though estimates reveal limited savings of between $1.4 billion to $7 billion have been achieved, mainly through workforce reductions.
Michael Peterson from the Peterson Foundation affirms that the CBO’s budget projections signal an urgent call for leaders regarding America's costly fiscal trajectory.
As the nation approaches a pivotal election year, voters increasingly recognize the link between escalating debt levels and their personal financial situations, with the financial markets keenly observing developments. Peterson emphasized that stabilizing the national debt is crucial for enhancing affordability and should be part of the critical dialogue in the upcoming 2026 campaign.
