The nonpartisan Congressional Budget Office (CBO) has released its 10-year outlook, projecting worsening long-term federal deficits and rising debt, driven largely by increased spending on Social Security, Medicare, and debt service payments. Compared with last year's analysis, the fiscal outlook has deteriorated modestly.
Major developments factored into the latest report include Republicans' tax and spending measure known as the 'One Big Beautiful Bill Act,' higher tariffs, and the Trump administration's crackdown on immigration. As a result, the projected 2026 deficit is about $100 billion higher, and total deficits from 2026 to 2035 are $1.4 trillion larger. Debt held by the public is projected to rise from 101% of GDP to 120%, exceeding historical highs.
Higher tariffs partially offset some increases by raising federal revenue by $3 trillion, but also contribute to higher inflation from 2026 to 2029. The CBO also indicates that inflation will not hit the Federal Reserve's 2% target rate until 2030. Rising debt and debt service costs crowd out government spending on infrastructure and education, which enable future economic growth.
Jonathan Burks of the Bipartisan Policy Center noted that 'large deficits are unprecedented for a growing, peacetime economy,' but added that 'there is still time for policymakers to correct course.' He urged lawmakers to explore options for raising revenue and trimming spending. Michael Peterson of the Peterson Foundation called the CBO's projection 'an urgent warning' and stressed that stabilising debt must be a core component of the 2026 campaign conversation.
