The U.S. Budget Deficit Will Significantly Increase Over the Next Decade

The U.S. federal budget deficit over the next decade will be a trillion dollars larger than previously projected by the Congressional Budget Office (CBO) in January, as a result of tax and budget laws and tariffs, one of the U.S. budget oversight bodies announced on Wednesday.

According to the latest forecasts from the Committee for a Responsible Federal Budget (CRFB), the cumulative budget deficit from fiscal 2026 to 2035 will amount to $22.7 trillion. In January, the CBO had projected a budget deficit of $21.8 trillion for the same period. That forecast was based on laws and policies that were in place before U.S. President Donald Trump took office in January, Reuters notes.

This year, the CBO will not release its updated report that it usually publishes mid-year, and the next forecast of budgetary and economic outlooks for the ten-year period will not be published until early 2026, reported the nonpartisan congressional agency, without providing reasons for this move.

According to the CRFB forecast, which advocates for reducing the budget deficit, the U.S. budget deficit in fiscal 2025 will amount to $1.7 trillion, or 5.6 percent of Gross Domestic Product (GDP). This estimate is slightly lower than the CBO’s January forecast, which expected a deficit of $1.87 trillion in 2025, but also lower than the deficit from 2024, which was $1.83 trillion. However, the CRFB predicts that the deficit will continue to grow throughout this decade, reaching $2.6 trillion, or 5.9 percent of GDP by 2035.

The new estimates from the CRFB account for the budgetary effects of Trump’s One Big Beautiful Bill tax and spending law, as well as the tariffs currently in effect. However, neither the CBO nor the CRFB include the dynamic economic effects of these changes on growth in their forecasts, which is criticized by Trump’s administration.

The CRFB predicts that the tax and spending law will increase the deficit, including interest, by $4.6 trillion by 2035, while the CBO estimated that these costs would amount to $4.1 trillion by 2034. However, the CRFB anticipates that these costs will be offset by tariff revenues of $3.4 trillion generated by the current tariffs.

New rules limiting eligibility for health insurance subsidies will reduce the deficit by an additional $100 billion by 2035, and by eliminating funding for foreign humanitarian aid, public television, and other programs, the U.S. will save another $100 billion if the measures last for ten years, the CRFB calculated.

Net interest on the national debt will amount to $14 trillion over the next decade, the CRFB predicts, increasing from nearly $1 trillion, or 3.2 percent of GDP in 2025, to $1.8 trillion, or 4.1 percent of GDP in 2035.

Tariff Challenges

The forecasts are based on legislative and tariff changes introduced since January, but retain the CBO’s January economic forecast. According to an alternative scenario predicted by the CRFB, the budget picture is much worse, with a deficit larger by nearly $7 trillion compared to the CBO’s baseline scenario. The CRFB’s scenario anticipates the elimination of a significant portion of Trump’s tariffs if rulings from the U.S. Court of International Trade against many new tariffs are upheld, which would reduce budget revenues by $2.4 trillion over the decade.

The alternative scenario also assumes the extension of a series of temporary tax cuts from the One Big Beautiful Bill, which would increase the deficit by $1.7 trillion over the decade.

Furthermore, the scenario rejects the CBO’s estimate that the yield on ten-year U.S. Treasury bonds will fall to around 3.8 percent over the next decade. If that interest rate remains at the current level of about 4.3 percent, interest costs will increase by about $1.6 trillion by 2035, the CRFB states.

The share of total U.S. debt in GDP would thus rise from 118 percent according to the CBO’s baseline scenario from January to 120 percent according to the CRFB’s baseline scenario, and even to 134 percent according to the CRFB’s alternative scenario.