Congressional Budget Office Warns of Rising Federal Deficits and Debt

Thu Feb 12 2026 00:41:12 GMT+0200 (Eastern European Standard Time)

The CBO's latest outlook indicates worsening fiscal conditions, with greater federal deficits due to increased spending on essential programs.

The Congressional Budget Office (CBO) has released its 10-year outlook revealing a troubling trend of escalating federal deficits and rising national debt, primarily driven by increased expenditures on Social Security, Medicare, and debt servicing. The report notes that compared to last year's analysis, the fiscal landscape has worsened slightly, predicting that by 2026, the deficit will be approximately $100 billion higher, with total deficits from 2026 to 2035 expected to increase by $1.4 trillion. Key contributing factors include new spending measures, tax policies, and immigration crackdowns. Although higher tariffs may elevate federal revenue, they could lead to increased inflation, with the CBO warning that policymakers must act swiftly to address these issues.

WASHINGTON (AP) — The nonpartisan Congressional Budget Office’s 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 of these changes, the projected 2026 deficit is about $100 billion higher, with total deficits from 2026 to 2035 increasing by $1.4 trillion, while public debt is expected to rise from 101% of GDP to 120% — surpassing historical highs.

Notably, the CBO indicates that higher tariffs partially offset some deficit increases by raising federal revenue by $3 trillion, albeit with a corresponding rise in inflation from 2026 to 2029.

Rising debt and debt servicing is critical, as providing returns to investors for borrowed funds limits government expenditures on vital infrastructure, education, and other essential services needed for economic growth.

The report also suggests that inflation won't meet the Federal Reserve’s 2% target until 2030.

Jonathan Burks, from the Bipartisan Policy Center, warns that “large deficits are unprecedented for a growing, peacetime economy.” He urges policymakers to explore options for raising revenue and cutting spending before the situation escalates further.

While lawmakers have recently addressed rising debt through caps and “extraordinary measures,” it often accompanies significant new spending that maintains high deficit levels.

Michael Peterson, CEO of the Peterson Foundation, calls the CBO’s projections an urgent warning about America's fiscal path, emphasizing the need to stabilize debt as a critical topic in upcoming electoral campaigns.