CBO Forecasts Worsening Federal Deficits and Debt Over Next Decade

Nonpartisan budget office cites increased spending on Social Security, Medicare, and debt service as key drivers of fiscal outlook deterioration.

Published on Feb. 11, 2026

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The Congressional Budget Office's latest 10-year budget outlook projects worsening federal deficits and rising debt, driven largely by increased spending on Social Security, Medicare, and debt service payments. Compared to last year's analysis, the fiscal outlook has deteriorated modestly, with the projected 2026 deficit about $100 billion higher and total deficits from 2026 to 2035 $1.4 trillion larger. Debt held by the public is projected to rise from 101% of GDP to 120%, exceeding historical highs.

Why it matters

Rising federal debt and debt service payments crowd out government spending on basic needs like infrastructure and education, which enable investments in future economic growth. The CBO's projections indicate that inflation won't hit the Federal Reserve's 2% target rate until 2030, further complicating the fiscal outlook.

The details

The CBO's latest report factors in major developments over the past year, including the 'One Big Beautiful Bill Act', higher tariffs, and the Trump administration's crackdown on immigration. While higher tariffs partially offset some of the deficit increases by raising federal revenue, they also contribute to higher inflation from 2026 to 2029. The CBO says large deficits are 'unprecedented for a growing, peacetime economy', and encourages policymakers to explore options for raising revenue, trimming spending, and slowing the growth of major cost drivers.

  • The CBO's 10-year budget outlook was released on February 11, 2026.
  • The CBO projects the federal deficit will worsen over the next decade, from 2026 to 2035.

The players

Congressional Budget Office (CBO)

The nonpartisan Congressional Budget Office is a federal agency that provides budget and economic analysis to the U.S. Congress.

Jonathan Burks

Executive vice president of economic and health policy at the Bipartisan Policy Center.

Michael Peterson

CEO of the Peterson Foundation, a nonpartisan organization focused on addressing America's fiscal challenges.

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What they’re saying

“Large deficits are unprecedented for a growing, peacetime economy, though the good news is there is still time for policymakers to correct course.”

— Jonathan Burks, Executive vice president of economic and health policy at the Bipartisan Policy Center

“This election year, voters understand the connection between rising debt and their personal economic condition. And the financial markets are watching. Stabilizing our debt is an essential part of improving affordability, and must be a core component of the 2026 campaign conversation.”

— Michael Peterson, CEO of the Peterson Foundation

What’s next

The CBO's latest budget projection serves as an urgent warning to policymakers, who have an opportunity to work together to explore options for raising revenue, trimming spending, and slowing the growth of major cost drivers before the available menu of choices becomes much more painful.

The takeaway

The CBO's deteriorating fiscal outlook underscores the need for policymakers to prioritize addressing the nation's rising deficits and debt, which threaten to crowd out critical investments in infrastructure, education, and other drivers of future economic growth.