CBO Forecasts Increasing Federal Deficits and Rising Debt Over Next Decade

Thu Feb 12 2026 01:05:57 GMT+0200 (Eastern European Standard Time)

The Congressional Budget Office warns of worsening federal deficits primarily driven by increased spending on healthcare and debt services, leading to unprecedented debt levels.

The Congressional Budget Office (CBO) has released its latest 10-year outlook, predicting increasing federal deficits and a substantial rise in national debt, largely attributed to heightened spending on Social Security, Medicare, and debt service payments. Their new report indicates that the debt could rise to 120% of GDP by 2035. Despite efforts to offset some increases through higher tariffs, inflation is anticipated to remain above federal targets until 2030. Experts call for immediate action from lawmakers to address these challenges.

WASHINGTON (AP) — The nonpartisan Congressional Budget Office’s (CBO) 10-year outlook projects worsening long-term federal deficits and rising debt, driven largely by increased spending, notably on Social Security, Medicare, and debt service payments.

Compared with the CBO’s analysis this time last year, the fiscal outlook has deteriorated modestly.

Major developments over the last year are factored into the latest report, released Wednesday, including Republicans’ tax and spending measure known as the One Big Beautiful Bill Act, higher tariffs, and the Trump administration’s crackdown on immigration.

As a result, the projected 2026 deficit is about $100 billion higher, and total deficits from 2026 to 2035 are $1.4 trillion larger, while debt held by the public is projected to rise from 101% of GDP to 120% — exceeding historical highs.

Notably, the CBO says higher tariffs partially offset some of those increases by raising federal revenue by $3 trillion, despite potentially leading to higher inflation from 2026 to 2029.

Rising debt and debt service is significant as repaying investors for borrowed money crowds out government spending on basic needs such as infrastructure and education, which enable investments in future economic growth.

Inflation is not expected to hit the Federal Reserve’s 2% target until 2030.

Jonathan Burks, executive vice president of economic and health policy at the Bipartisan Policy Center stated, “large deficits are unprecedented for a growing, peacetime economy” but acknowledged that there is still time for policymakers to correct course.

Burks encouraged lawmakers to collaborate on raising revenue and trimming spending, saying, “Congress and the administration should seize the opportunity to act now before the available menu of choices becomes much more painful.”

In conclusion, the CBO’s latest budget projection is characterized as an urgent warning about America’s costly fiscal path, with analysts emphasizing the importance of stabilizing debt as part of the 2026 campaign conversation.