The U.S. Congressional Budget Office (CBO) released its 10-year fiscal outlook on Wednesday, projecting that federal deficits and debt will worsen over the next decade. The report attributes the deterioration mainly to increased spending on Social Security, Medicare, and debt service payments. The deficit for fiscal 2026, President Donald Trump’s first full fiscal year, is expected to be about 5.8 percent of GDP, similar to 2025’s $1.775 trillion shortfall. The deficit-to-GDP ratio is forecast to average 6.1 percent over the next decade, reaching 6.7 percent in 2036, far above Treasury Secretary Scott Bessent’s goal of 3 percent.

The CBO factored in recent policy changes, including the Republican “One Big Beautiful Bill Act,” higher tariffs, and the Trump administration’s immigration crackdown. These measures are projected to raise total deficits from 2026 to 2035 by $1.4 trillion and push public debt from 101 percent to 120 percent of GDP. Although higher tariffs are expected to generate $3 trillion in additional revenue, they also contribute to inflation through 2029. The CBO projects inflation will not reach the Federal Reserve’s 2 percent target until 2030.

The report contrasts with the Trump administration’s more optimistic growth forecasts, as the CBO expects real GDP growth to slow from 2.2 percent in 2026 to an average of 1.8 percent later in the decade.