The newest fiscal forecast from the Congressional Budget Office (CBO), released this Wednesday, amounts to a damning report card on the Trump administration’s first-year tax and economic policies. It projects staggering deficits, a deteriorating debt path, and rising interest costs. But what makes the assessment especially striking is how much worse these numbers are compared to just a year ago, before the White House’s profligate, short-sighted agenda was put into effect.
The report’s topline numbers are sobering. Annual deficits are projected to exceed $3 trillion by the end of the decade, up from $1.9 trillion this year and nearly $500 billion higher than last year’s forecast. Over the longer term, the picture is equally troubling. The CBO now projects that over the next three decades, our deficit-to-GDP ratio will increase roughly four times faster than it previously anticipated. As a result, federal debt held by the public is expected to rise to 172% of GDP by 2055, well above last year’s 156% estimate.
This deterioration from previous projections is not coincidental. It reflects deliberate choices made by the Trump administration over the past year. Take the One Big Beautiful Budget Act (OBBBA), the administration’s domestic policy centerpiece. The law’s extension and expansion of trillions of dollars in unpaid-for tax cuts is projected to add roughly $4.7 trillion to the deficit over the next decade. This large cost was no secret during the legislative process, yet many supporters argued that rapid growth would cover the gap. CBO’s analysis tells a different story, pointing to a modest and temporary boost to GDP, with long-run economic growth largely unchanged from a year ago.
The administration’s immigration agenda has also taken a toll on America’s fiscal outlook. By ramping up deportations — while also sharply cutting legal immigration — the administration is precipitously shrinking the labor force, constraining long-term economic output, and eroding the future tax base. CBO projects that overall, the administration’s immigration policies will cumulatively increase the deficit by roughly $500 billion over the next decade.
Even more worrisome is that CBO projections are likely overestimating the government’s only major new source of revenue. It credits the Trump administration with roughly $3 trillion in new tariff revenue, which, despite tariffs’ many other damaging economic effects, has partially offset the impact of their deficit-fueling policies elsewhere. But the bulk of this new tariff revenue is built on legally dubious emergency declarations currently being litigated in the Supreme Court. If the justices strike down the tariffs, America’s fiscal trajectory could soon look even worse than CBO’s already somber projections.
This lack of fiscal discipline in Washington is especially reckless given the nation already pays more than $1 trillion annually for debt servicing, which reached its all-time high as a percent of GDP in 2025. Now should be the time for lawmakers to reduce the deficit and bring interest payments down to a manageable level. But instead, the CBO projects that debt servicing costs will continuously break new records going forward. By 2047, interest costs are expected to eclipse Social Security to become the largest federal expenditure. By 2055, they will constitute a whopping 6.8% of GDP, more than double what they are today and 25% higher than last year’s projections.
Beneath these interest projections lies an equally troubling structural shift. When the government’s average interest rate rises above the economy’s nominal growth rate, debt begins to compound faster than the economy can grow its way out of it, setting up a dangerous spiral. In that environment, even modest deficits can cause the debt-to-GDP ratio to climb, forcing policymakers to embrace extreme austerity measures and run sustained primary surpluses just to stabilize the fiscal outlook. The CBO projects that this will be the case within the next few years — far earlier than its previous forecast of 2045 — making today’s deficit binge even more perilous than it may appear.
A worsening fiscal outlook ultimately means lower living standards. Americans face the prospect of higher interest rates across the economy, appearing as higher mortgage payments, auto loans, and small business financing costs. Persistent deficits can also crowd out private or public investments, dampening productivity and wage growth over time. And for the millions of people that rely on government programs, rapidly increasing interest costs will force more and more revenue just to pay for yesterday’s consumption, leaving less available for critical public services and programs.
This administration remains wholly uninterested in fiscal discipline, choosing to embrace fantastical promises about cost-cutting and growth rather than confront the dismal reality its policies are ushering in. But to prevent the biggest consequences of runaway debt, Washington must act as soon as possible to reverse course and confront our nation’s fiscal challenges. Bringing the deficit down to 3% of GDP, as one recent bipartisan resolution proposes, would be a sensible step in the right direction. But words alone won’t be enough. Lawmakers must deliver a comprehensive, balanced package to do so, including pro-growth tax reform that raises adequate revenue, sensible entitlement adjustments that reflect demographic realities, and a retreat from this administration’s economically damaging trade and immigration policies.
