Every year, the nonpartisan Congressional Budget Office (CBO) publishes a ten-year projection of the federal government’s revenues, spending, and debt under current law and policy. Its projection for 2026 to 2036 came out today, and, to the surprise of no one, our fiscal future looks even bleaker now than it did a year ago.
First, the basic statistics of the impending debt disaster: Federal spending is set to increase from 23.1 percent of GDP in 2025 to 24.4 percent a decade from now, outpacing growth in revenue. That will cause the annual deficit to grow from 5.8 percent of GDP to 6.7 percent in the same period. Most horrifying, the national debt held by the public will rise from 99.4 percent of the nation’s annual output to 120.2 percent. (And you can bet that it will only go up from there.)
The CBO now projects that the average interest rate on the debt will exceed the rate of nominal GDP growth beginning in 2031, meaning that existing debt will rise faster than the U.S. economy — before the federal government borrows anything more to cover new spending. This rosy assessment assumes that the interest rate on the ten-year Treasury never approaches 5 percent, which it did as recently as October 2023. And all the agency’s projections assume no new recessions, no wars, no other crises, and — most ridiculously — no new spending programs or tax cuts.
The primary driver of the debt is not too-low revenue, as progressives like to insist. Receipts from the federal income tax are actually expected to rise as a share of GDP, and overall revenue is projected to be higher as a percentage of GDP than the historical average from 2026 to 2036. The biggest problems for the deficit are on the spending side, and they’re on autopilot: mandatory spending, mostly on popular entitlement programs like Social Security and Medicare, and net interest costs. To its everlasting disgrace, Congress has chosen to resolutely ignore — and sometimes exacerbate — the entitlement state’s structural deficits.
Despite expenditures deserving most of the blame, Republicans’ tax-cut reconciliation law from last year is expected to increase the debt by around $4.7 trillion relative to last year’s projections. Its cost is partially offset by an enormous increase in revenue from customs duties, as the CBO assumes that Trump’s suite of exorbitant tariffs will stay in place. If the Supreme Court strikes down most of the president’s tariffs covered by the IEEPA statute — as it should, in accordance with the law and the Constitution — or if a future president removes the tariffs (not Congress, obviously), the national debt a decade from now will be even more unmanageable than the CBO anticipates.
To summarize, everything on the fiscal front is still completely god-awful — but now a little bit worse. Can’t wait for next year’s report.