The Congressional Budget Office’s latest 10-year fiscal outlook, released Wednesday, projects a deterioration in long-term federal deficits and rising debt that the CBO links largely to increased spending for Social Security, Medicare and the interest cost of servicing the national debt. The report also reflects changes over the past year that include Republicans’ tax and spending measure described as the “One Big Beautiful Bill Act,” higher tariffs, and the Trump administration’s immigration enforcement steps, including deporting millions of immigrants from the mainland U.S., according to the AP’s summary of the CBO projection.
The CBO said the fiscal outlook has worsened modestly compared with its analysis from this time last year, while incorporating those policy changes into its baseline. As a result, the report projects a 2026 deficit that would be about $100 billion higher than in the prior year’s outlook, and it projects total deficits from 2026 to 2035 to be $1.4 trillion larger.
In the CBO’s projections, debt held by the public would increase from 101% of GDP to 120%, which it describes as exceeding historical highs. The CBO said the rise matters in part because the growing cost of repaying investors for borrowed money can crowd out other federal spending on priorities tied to longer-term growth, including roads, infrastructure and education.
The CBO’s outlook also includes an explicit tradeoff from tariff policy. While the report said higher tariffs would partially offset some of the increases by raising federal revenue by $3 trillion, it also projected that higher tariffs would be associated with higher inflation from 2026 to 2029.
The report further projects a long path for inflation to return to the Federal Reserve’s stated 2% target. The AP’s summary of the CBO outlook said inflation does not hit the Fed’s 2% target rate until 2030.
Jonathan Burks, executive vice president of economic and health policy at the Bipartisan Policy Center, said the magnitude of the deficits is striking. In remarks cited by the AP, Burks said “large deficits are unprecedented for a growing, peacetime economy,” while adding: “the good news is there is still time for policymakers to correct course.” Burks said the Bipartisan Policy Center encourages lawmakers to work together to “explore options for raising revenue, trimming spending, and slowing the growth of the major cost drivers,” and he said the “Congress and the administration should seize the opportunity to act now before the available menu of choices becomes much more painful.”
The AP summary of the CBO outlook also described how lawmakers have sometimes responded to rising debt and deficits with targeted spending caps and debt limit suspensions, and with “extraordinary measures” when the U.S. is close to hitting its statutory spending limit. It said those approaches have sometimes been accompanied by new, large-scale spending or tax policies that maintain high deficit levels. It also said that at the start of his second term, President Donald Trump set up a Department of Government Efficiency with a goal of balancing the budget by cutting $2 trillion in waste, fraud and abuse, while budget analysts estimate the DOGE cuts would range from $1.4 billion to $7 billion, largely through workforce firings.
Michael Peterson, CEO of the Peterson Foundation, called the CBO projection an urgent warning. In remarks cited by the AP, Peterson said the CBO’s latest budget projection “is an urgent warning to our leaders about America’s costly fiscal path,” and he said voters understand the link between rising debt and their personal economic conditions, while financial markets are also watching. Peterson said stabilizing debt is “an essential part of improving affordability” and should be a core component of the 2026 campaign conversation.