budget deficits — US federal budget deficits are expected to be nearly $1 trillion higher over the next decade than the January forecast from the Congressional Budget Office (CBO), according to the Committee for a Responsible Federal Budget (CRFB).
The CRFB’s latest analysis anticipates a cumulative deficit of $22.7 trillion from fiscal years 2026 to 2035, compared to the CBO’s earlier projection of $21.8 trillion. This adjustment stems from recent tax and spending legislation as well as tariffs implemented during the Trump administration.
Budget deficits: Shifts in Forecasts and Budget Practices
The CBO, which serves as Congress’s non-partisan budget referee, has opted not to release its customary mid-year budget update this year. The next 10-year budget and economic outlook is set for early 2026, a decision that has not been explained.
The CRFB predicts a deficit of $1.7 trillion for fiscal 2025, representing 5.6 per cent of GDP, a slight reduction from the $1.83 trillion projected for 2024 and lower than the CBO’s January projection of $1.87 trillion for the same year. However, the CRFB warns that deficits will continue to increase, potentially reaching $2.6 trillion or 5.9 per cent of GDP by 2035.
Factors Influencing Budget Changes
The updated CRFB estimates take into account various legislative changes, including the One Big Beautiful Bill Act tax and spending bill, alongside the tariffs currently in effect. Importantly, these estimates do not factor in the dynamic economic effects of these changes, a point that has drawn criticism, particularly from the Trump administration.
According to the CRFB, the tax cut and spending bill is projected to increase deficits by $4.6 trillion through 2035, exceeding the CBO’s earlier estimate of $4.1 trillion by a year. However, this increase is expected to be partially offset by $3.4 trillion in additional revenue generated from tariffs over the next decade.
Impact of Policy Changes on Deficits
New regulations limiting eligibility for health insurance subsidies are projected to save $100 billion through 2035, while Congress’s rescission of prior funding for foreign aid and public broadcasting could save another $100 billion if these cuts are maintained over the decade.
CRFB forecasts indicate that net interest payments on the national debt will accumulate to $14 trillion over the next ten years, increasing from nearly $1 trillion, or 3.2 per cent of GDP, in 2025 to $1.8 trillion, or 4.1 per cent of GDP, by 2035.
Alternative Scenarios Raise Concerns
The CRFB’s projections are based on recent legislative and tariff changes while maintaining the CBO’s unchanged economic forecasts. However, an alternative scenario presented by the CRFB paints a more concerning picture, suggesting deficits could rise nearly $7 trillion above the CBO baseline.
This alternative scenario assumes the cancellation of a significant portion of Trump’s tariffs, which could reduce revenues by $2.4 trillion over the decade. It also considers the potential extension of temporary tax cuts included in the One Big Beautiful Bill Act, which would add another $1.7 trillion to the deficits over ten years.
Moreover, if the current interest rates remain stable at about 4.3 per cent, contrary to the CBO’s expectation of a decline to approximately 3.8 per cent, interest costs could increase by about $1.6 trillion through 2035. Consequently, the debt-to-GDP ratio for 2035 could escalate from the CBO’s January baseline of 118 per cent to 120 per cent under the CRFB’s baseline scenario, and potentially as high as 134 per cent under the alternative scenario.
