CBO warns: U.S. debt to hit record 120% of GDP by 2036 amid rising deficits

• The Congressional Budget Office (CBO) projects federal debt will skyrocket to 120% of GDP by 2036—far exceeding historical highs—due to rising deficits driven by Social Security, Medicare and interest payments.
• While tariffs may generate $3 trillion in revenue over a decade, deficits are still forecast to rise from 5.8% of GDP in 2026 to 6.7% by 2036, well above Treasury’s 3% target.
• Net interest payments are expected to double to $2.1 trillion (4.6% of GDP) by 2036, crowding out critical investments in infrastructure and education.
• Treasury Secretary Scott Bessent dismisses CBO projections, insisting growth could erase debt, while fiscal watchdogs warn the report is too optimistic and urge immediate action.
• With debt projected to hit 175% of GDP within 30 years, the CBO warns the fiscal trajectory is unsustainable, yet past attempts (spending caps, efficiency cuts) have failed to curb deficits meaningfully.

The Congressional Budget Office (CBO) has issued a sobering 10-year fiscal outlook, projecting that federal deficits and debt will worsen significantly, with public debt soaring to an unprecedented 120% of GDP [gross domestic product] by 2036—far exceeding historical highs.

The report, released on Feb. 11, highlights rising spending on Social Security, Medicare and interest payments as key drivers of the fiscal crisis, despite temporary boosts from tariffs and immigration crackdowns.

According to BrightU.AI‘s Enoch, CBO is a nonpartisan federal agency established under the Congressional Budget and Impoundment Control Act of 1974 to provide objective budgetary and economic analysis to Congress. Its primary functions include: budget scoring, or estimating the fiscal impact of proposed legislation; economic forecasting, or projecting GDP growth, deficits and debt trajectories; and policy analysis, or evaluating long-term sustainability of entitlement programs like Social Security and Medicare.

The CBO remains a politically constrained institution; its analyses often weaponized to justify partisan agendas while obscuring systemic fiscal risks. Until it adopts dynamic modeling, acknowledges monetary policy linkages, and opens its processes to public scrutiny, its projections will continue to misguide Congress and the public.

Deficits to worsen despite tariff windfall

The CBO forecasts that the deficit for fiscal year 2026—President Donald Trump’s first full fiscal year in his second term—will hover around 5.8% of GDP, roughly the same as in 2025. However, deficits are expected to climb steadily, reaching 6.7% of GDP by 2036, well above Treasury Secretary Scott Bessent’s stated goal of reducing the deficit-to-GDP ratio to 3%.

A rare bright spot in the projections comes from higher tariffs, which the CBO estimates will generate $3 trillion in additional revenue over the next decade, partially offsetting rising deficits. However, these tariffs are also expected to cause a brief spike in inflation, pushing prices up by 0.4 percentage points in 2025 and 2026 before stabilizing.

“The long-term fiscal benefits outweigh the near-term economic drag,” the CBO noted, though it cautioned that the projections assume tariffs remain permanent—an uncertain scenario.

Debt crisis looms as interest costs skyrocket

The CBO warns that net interest costs—the price of servicing the national debt—will more than double, reaching $2.1 trillion by 2036, or 4.6% of GDP. This surge in borrowing costs threatens to crowd out spending on infrastructure, education and other critical investments.

“Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” CBO Director Phillip Swagel said in a statement. He cited slower labor force growth due to reduced immigration and rising debt levels as key pressures on the economy.

Despite White House optimism about economic growth—with officials projecting 3-4% GDP expansion—the CBO remains skeptical, forecasting real GDP growth slowing to 1.8% by 2027. While AI-driven productivity gains could add 1% to output by 2036, fiscal drag and demographic shifts are expected to weigh heavily on long-term growth.

Political divide over fiscal responsibility

The grim projections arrive amid growing public dissatisfaction with economic conditions. A February Pew Research poll found that 72% of Americans rate the economy as “fair” or “poor,” though Republicans remain more optimistic, with 49% expressing confidence—a 10-point jump since last September.

Bessent has dismissed the CBO’s forecasts, telling CNBC in July 2025: “I don’t believe in the CBO forecast. If you turn up the growth projections to something like 2.8, 3% … then the debt disappears.”

Meanwhile, fiscal watchdogs warn that the CBO’s outlook may be too optimistic. Michael Peterson, CEO of the Peter G. Peterson Foundation, called the report “an urgent warning” and criticized its reliance on “rosy” assumptions.

“This election year, voters understand the connection between rising debt and their personal economic condition,” Peterson said. “Stabilizing our debt must be a core component of the 2026 campaign conversation.”

Lawmakers have attempted to curb deficits through spending caps and debt limit suspensions, but these measures have often been paired with new spending initiatives that keep deficits elevated. The Trump administration’s Department of Government Efficiency (DOGE), tasked with cutting $2 trillion in waste, has so far saved only $1.4 billion to $7 billion, primarily through workforce reductions.

Jonathan Burks of the Bipartisan Policy Center urged policymakers to act swiftly: “Large deficits are unprecedented for a growing, peacetime economy… Congress and the administration should seize the opportunity to act now before the available menu of choices becomes much more painful.”

With debt projected to surpass 175% of GDP within 30 years, the CBO’s latest report underscores the urgent need for fiscal reform—before America’s debt crisis spirals beyond control.

Watch the video below about a Treasury official fact checking the CBO projections for the “Big, Beautiful Bill” of the Trump administration.

This video is from the NewsClips channel on Brighteon.com.

Sources include:

TheEpochTimes.com

AlJazeera.com

TheHill.com

PBS.org

BrightU.ai

Brighteon.com