The U.S. Economy is navigating the shifting policies of the Donald Trump administration, but growing imbalances in the national deficit and public debt are raising concerns among economists and lawmakers. Phillip Swagel, director of the Congressional Budget Office (CBO), stated on Wednesday that the agency’s budget projections “continue to indicate that the fiscal trajectory is unsustainable.” The CBO periodically analyzes and projects public spending and revenues.
The CBO forecasts that large and growing public deficits will lead to increased debt between 2026 and 2036. Federal debt held by the public is projected to rise from 101% of GDP this year to 120% in 2036, surpassing its previous high of 106% of GDP in 1946, shortly after the end of World War II.
The United States faces a fiscal sustainability problem. The CBO estimates the federal government’s deficit will reach $1.9 trillion this year, equivalent to 5.8% of GDP. Spain, for comparison, closed last year with a deficit of around 3% of GDP, while France, identified as a country with high fiscal risk, registered a deficit of nearly 5.6%.
The situation in the U.S. Is expected to worsen. The CBO projects that imbalances between spending and income will total $3.1 trillion by 2036, or 6.7% of GDP. Agency officials warn Here’s higher than the average deficit of 3.8% over the last 50 years.
The report attributes the accelerating fiscal gap to rising financial costs for servicing the public debt. The primary deficit, excluding interest on that debt, is calculated to be 2.6% this year and is expected to remain below that level through 2036.
Since President Trump began his second term, the U.S. Economy has experienced tensions due to policy shifts. He initiated a trade war by imposing tariffs worldwide and approved the “Big Gorgeous Bill,” which increases tax deductions for large corporations. Approximately 250,000 federal employees have been dismissed, and hundreds of public agencies have been eliminated in an effort to minimize government spending.
Despite these changes, the CBO calculates that this year’s deficit will be $0.1 trillion higher than last year’s. Compared to projections from January 2025, the federal government is expected to record a $23.1 trillion deficit over the next nine years, instead of the previously projected $21.8 trillion.
The CBO analyzed the “Big Beautiful Bill,” noting it reduced tax rates for most households and businesses, increased business investment deductions, and reduced effective marginal rates. It also restricted access to Medicaid, food assistance programs, and federal student loan relief, while increasing spending on defense, national security, and immigration enforcement.
Despite promotion of the law as a solution to U.S. Problems, the CBO believes it will increase total deficits by $4.7 trillion over the next decade compared to previous projections. This increase would be partially offset by higher revenues from tariffs, which are expected to reduce deficits by $3 trillion.
However, the legality of some of Trump’s tariffs is pending a decision by the Supreme Court. If invalidated, the president could impose other tariffs, but they would likely generate less revenue, impacting the system’s sustainability.
Jonathan Burks, of the Center for Bipartisan Policy, stated that the current large deficits are “unprecedented for a growing economy and in peacetime.” He added, “The quality news is that there is still time for policymakers to change course.” Michael Peterson, of the Peterson Foundation, believes the CBO’s latest budget projection “is an urgent warning to our leaders about the costly fiscal path the United States is on.”
Upon entering office, Trump appointed his friend Elon Musk to lead the Office of Government Efficiency (OGE), with a commitment to cut public spending by $2 trillion. Disagreements between the two led to Musk’s departure from the government. Analysts estimate that the cuts achieved were between $1.4 billion and $7 billion, primarily through staff reductions, falling short of the initial commitments.
Frequently Asked Questions
What is the CBO?
The CBO is the Congressional Budget Office, an independent agency that provides analysis and projections of federal spending and revenues to Congress.
What is the current U.S. Deficit?
The CBO estimates the federal government’s deficit will reach $1.9 trillion this year, equivalent to 5.8% of GDP.
What is the “Big Beautiful Bill”?
The “Big Beautiful Bill” is a law approved by the Trump administration that increases tax deductions for large corporations, while also making changes to social programs and increasing spending in areas like defense.
Given these projections, what steps might policymakers consider to address the growing national debt?
