CBO Predicts $1 Trillion Higher Debt by 2036 Despite Trump’s Big Beautiful Bill

The Congressional Budget Office is projecting a $53.1 trillion total debt owed at the end of 2035, a nearly 40 percent increase in the debt over the next 10 years and $1 trillion more than its prediction of a year ago. The revised numbers for debt held by the public — meaning money owed by the federal government to everybody else — will surpass 100 percent of annual GDP this year, leap to 120 percent by 2036, and could reach 175 percent by 2056, says Congress’s nonpartisan bean counters. Interest payments alone on the debt will reach 4.6 percent of gross domestic product by 2036 from 3.2 percent.The total outstanding debt, including money owed for intragovernmental payments like borrowing from the Social Security and Medicare trust funds, is $38.5 trillion today, compared to $36.2 trillion when President Trump came into office just over a year ago. As a percentage increase, the one-year increase in debt is slightly less than President Biden’s first year in office during the Covid recovery. The budget office predicts that the portion of the debt that is due to annual deficit spending will go down. Instead, interest on the debt will take up more of government spending. The increased debt is surging in part because of the One Big Beautiful Bill Act passed in July, say the authors of the report, who note that while the economy is expected to grow from the bill, so will government borrowing and interest rates. “The 2025 reconciliation act contributes to stronger growth in 2026 that boosts revenues but also increases interest rates. The latter effect dominates, so overall, the economic changes brought about by the 2025 reconciliation act slightly increase the deficit,” the CBO’s director, Phillip L. Swagel, said in a statement accompanying the report. “That result highlights how the nation’s large stock of debt influences the way that changes in the economy stemming from legislation affect the federal budget,” he said.Historically, primary deficits and interest payments as a percentage of the economy, peaked in 2009 and 2020, during the Great Recession and Covid pandemic respectively. However, the amount of the debt surpassing 100 percent of economic output has not happened since 1946 just after the end of World War II.While the CBO projects debt to surpass economic output for decades to come, it also estimates annual growth to be steady at 1.8 percent for the next nine years after 2027. However, changes in the way the White House conducts business will have largely untested impacts on that growth rate and spending. For instance, the Office of Management and Budget told The Wall Street Journal that since its September midsession review, it has updated its estimated savings to $13.5 trillion over the next 10 years, including $2 trillion from entitlement reforms for Medicaid, student loans, and food stamps. At the same time, it expects savings from deregulation along with tax reforms to spur three percent per year growth, even as defense and homeland security spending skyrocket. Mr. Trump said last week that deregulation at the Environmental Protection Agency, which eliminated the Endangerment Finding, an Obama-era rule that required automakers to limit its greenhouse gas emissions, will create $1.3 trillion in regulatory savings for the auto industry, lowering car prices and stimulating buying.Despite the cuts to entitlement payouts, the CBO notes that the solvency timebomb for Social Security and Medicare, the point where the funds run out of money to pay entitlements at current rates, has moved back by one year to 2032 as the government raids the trust funds. Intergovernmental borrowing now stands at $7.6 trillion, drawn from the funds, which are already earning less than they are required to pay out. The report, issued last week, also notes that tariffs will help reduce the debt while reduced immigration will add to it, as the labor force slows its growth. Artificial intelligence productivity, however, makes up for the loss.Mr. Swagel predicted that interest rates should remain steady after 2027 “as the forces exerting upward pressure on interest rates (most notably rising federal debt) and the forces exerting downward pressure on them (most prominently the slower growth of the labor force) balance each other out.

CBO Predicts $1 Trillion Higher Debt by 2036 Despite Trump’s Big Beautiful Bill

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