The Congressional Budget Office (CBO) released its Budget and Economic Outlook today. CBO projects that debt held by the public will surpass its record as a share of the economy in 2030 – just four years from now – and reach a massive 120% of Gross Domestic Product (GDP) by 2036.
CBO projects the budget deficit will be $1.9 trillion in Fiscal Year (FY) 2026 and rise to $3.1 trillion in 2036, resulting in deficits totaling $24 trillion over the next decade. CBO also updated its estimate of last year’s budget reconciliation law – the One Big Beautiful Bill Act (OBBBA) – finding that the law will add $4.2 trillion to the national debt through 2034 and $4.7 trillion through 2035 on a dynamic basis.
Read our summary analysis here.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
There are no surprises here or bright spots of encouraging news: our nation’s deficits, debt, interest payments and trust funds are all in terrible shape.
We are borrowing nearly $2 trillion annually, headed to $3 trillion within a decade. The trillion dollars we currently spend on interest payments is projected to double to $2 trillion. Spending is continuing to grow rapidly as a share of the economy, from 23.1% of GDP last year – already well above the historical average of 21.2% – to 24.4% by 2036. And debt will grow to a larger share of the economy than any time in history in just four years.
A healthy balance sheet is critical for a growing economy, national security, and the ability to respond to unforeseen emergencies. With debt around 100% of GDP and growing, we will enter the next crisis with a higher debt-to-GDP ratio than we ever have had before.
At this moment in time with challenges ranging from the aging of society to growing geo-political rivalries, it is nothing short of self-sabotage to operate with such a self-imposed disadvantage.
Today’s CBO report also reminds us once again that we are far too close to the brink of insolvency for our major trust funds. The Highway Trust Fund is projected to run out in 2028, and Social Security’s retirement program will be insolvent by 2032.
Fiscal leadership is not easy – it requires committing to not making the situation worse by withholding support for new legislation that is debt financed, focusing on actual solutions rather than casting blame, and being willing to make tough policy choices that will be the centerpiece of any serious debt deal. This is too important a moment for our leaders to shirk these responsibilities, and I encourage every Member of Congress and the President to take a cold hard look at these numbers and pledge to fix our nation’s finances before it is too late. |