America’s federal deficit will be nearly $1 trillion higher over the next ten years than projected in January, driven by tax-and-spending legislation and tariffs, according to the Committee for a Responsible Federal Budget (CRFB).
The watchdog’s latest outlook sees a cumulative deficit of $22.7 trillion between 2026 and 2035, compared with the Congressional Budget Office’s (CBO) January estimate of $21.8 trillion. That earlier projection was based on laws in place before President Donald Trump took office in January.
CBO Pulls Mid-Year Update
The nonpartisan CBO said on Monday it will not publish its customary mid-year budget update in 2025. Instead, its next ten-year budget and economic forecast will come in early 2026, without explanation for the delay.
Deficits Rising Despite Brief Dip
The CRFB projects a $1.7 trillion deficit in fiscal year 2025, or 5.6% of GDP—slightly lower than last year’s $1.83 trillion and the CBO’s January forecast of $1.87 trillion. But deficits are set to climb steadily across the decade, reaching $2.6 trillion, or 5.9% of GDP, by 2035.
Impact of Trump’s Tax and Tariff Agenda
The watchdog’s projections incorporate Trump’s One Big Beautiful Bill Act—a sweeping package of tax cuts and new spending—along with tariffs currently in effect. Like the CBO, the CRFB excludes “dynamic” growth effects from tax and trade policies, a practice the Trump administration has criticized.
The group estimates the new tax-and-spending law will add $4.6 trillion to deficits through 2035, mainly through higher interest costs. That impact is partly offset by $3.4 trillion in extra revenue from Trump’s tariffs over the decade.
New rules limiting eligibility for health insurance subsidies will cut deficits by another $100 billion, while scrapping previous allocations for foreign aid, public broadcasting, and other programs could save an additional $100 billion if sustained for ten years.
Interest Costs Soar
Net interest payments on the national debt will total $14 trillion over the decade, rising from nearly $1 trillion (3.2% of GDP) in 2025 to $1.8 trillion (4.1% of GDP) by 2035.
Alternative Scenario: Much Worse Outlook
In a bleaker scenario, deficits would rise by almost $7 trillion above the CBO baseline. That case assumes U.S. courts strike down large portions of Trump’s tariffs, erasing $2.4 trillion in revenue over ten years.
It also factors in extensions of temporary tax breaks—such as exemptions for overtime, tips, Social Security income, and auto loan interest—adding $1.7 trillion to deficits. Higher deductions for state and local taxes and full expensing of factory investments would deepen the shortfall.
The alternative outlook also rejects the CBO’s expectation of falling Treasury yields. If 10-year rates stay near today’s 4.3% instead of dropping to 3.8%, interest costs alone would climb by $1.6 trillion through 2035.
Debt-to-GDP Set to Climb
Under the CRFB’s baseline, the debt-to-GDP ratio would reach 120% by 2035, up from the CBO’s January projection of 118%. In the alternative scenario, it would surge to 134%, a level that underscores the mounting strain of America’s fiscal path.
Based on information from CNA