CBO predicts unsustainable debt and deficits by 2036

Feb. 11 (UPI) — The nation’s debt and federal deficit likely will become unsustainable and worsen by trillions of dollars over the next 10 years, the Congressional Budget Office reported on Wednesday.

The CBO predicted the federal budget deficit will reach $1.9 trillion by the end of 2026, which is equal to about 5.8% of the nation’s gross domestic product.

This year’s deficit is projected to be about the same as last year’s, but the annual amount is expected to rise to $3.1 trillion within 10 years, which would equal 6.7% of the anticipated gross domestic product in 2036.

“Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” CBO Director Philip Swagel said in a prepared statement.

The CBO projected the cumulative amount of national debt due to the annual deficits to grow by $23.1 trillion by 2036, which would total $61.66 trillion when added to the current debt of $38.56 trillion.

“Those sustained large deficits are historically unusual, given that the unemployment rate is projected to remain below 5%,” Swagel said.

Largely driving the deficit and debt projections are prior tax cuts that were extended by the One Big Beautiful Bill Act of 2025, tariffs and decreased immigration, the CBO reported.

“Tax provisions, including the permanent extension of provisions of the 2017 Tax Act, increase deficits, as does increased spending on defense and homeland security,” Swagel said.

“Other provisions of the 2025 [One Big Beautiful Bill Act], such as changes to Medicaid and the Supplemental Nutrition Assistance Program, reduce deficits,” he added.

The CBO said tariffs should reduce national deficits by a combined total of $3 trillion over the next decade, but decreased immigration is likely to add about $500 billion to the deficits.

Swagel said incentives to work and invest that are part of the One Big Beautiful Bill Act will “boost economic growth,” but bigger budget deficits and reduced immigration likely will offset the impact of those incentives.

Such debt generates interest for those holding the respective bonds, notes and bills, which further increases the annual national deficits and debt.