WASHINGTON (AP) — The Congressional Budget Office (CBO) has released a new report indicating that federal deficits are projected to worsen significantly over the next decade. The report cites increased spending primarily on Social Security, Medicare, and necessary debt service payments as major contributing factors to the escalating national debt.
Compared to last year’s analysis, the current fiscal outlook has deteriorated modestly, revealing that the projected deficit for 2026 is about $100 billion higher. Overall deficits from 2026 to 2035 are expected to rise by $1.4 trillion, with national debt forecasted to climb from 101% of GDP to 120%, surpassing previous records.
The CBO also notes that higher tariffs will mitigate some of the deficit increases by generating an additional $3 trillion in federal revenue, although this will come with the adverse effect of rising inflation between 2026 and 2029.
The increased necessity for debt servicing is a critical concern as it diverts funds from other essential government expenditures, such as infrastructure and education, pivotal for long-term economic growth. Rising federal debt is particularly alarming as it compromises the economy's ability to sustain stability and growth.
Inflation rates are expected to remain above the Federal Reserve's goal until 2030, prolonging economic pressures. Jonathan Burks, executive vice president of a prominent economic policy organization, emphasizes the urgency for policymakers to correct course, stating, large deficits are unprecedented for a growing, peacetime economy. He implores lawmakers to collaborate on revenue enhancement strategies and alleviate spending to prevent more painful fiscal decisions in the future.
Despite various legislative efforts to cap spending and suspend debt limits, targeted measures have often coincided with substantial new spending policies, perpetuating high deficit levels. In facing these challenges, experts like Michael Peterson, CEO of a well-known fiscal think tank, highlight that voters recognize the direct link between rising national debt and their economic well-being, urging a focus on stabilizing debt during the upcoming electoral discourse.
