For those who like to look at monthly economic data – budgets and deficits, consider this longer term outlook.

The Congressional Budget Office (CBO) released its February 2026 Budget and Economic Outlook today, updating its January 2025 baseline to account for the One Big Beautiful Bill Act (OBBBA), tariffs, changes in immigration, recent trends in the economy, and other factors. CBO’s latest projections show:

• Debt will reach a record 120% of Gross Domestic Product (GDP) by 2036. CBO projects that debt held by the public will grow by $25 trillion, from nearly $31 trillion today to $56 trillion by 2036. As a share of the economy, debt will grow from 100% of GDP today to a record 108% by 2030 and 120% by 2036.
• Deficits will exceed $3 trillion by 2036. Deficits will total $24.4 trillion (6.1% of GDP) over the next decade, rising from $1.8 trillion (5.8% of GDP) in 2025 to $3.1 trillion (6.7% of GDP) by 2036.
• Spending is larger and growing faster than revenue. Spending will rise from 23.1% of GDP ($7.0 trillion) in 2025 to 24.4% ($11.4 trillion) by 2036. Revenue will rise from 17.2% of GDP ($5.2 trillion) to 17.8% ($8.3 trillion) in 2036.
• Interest costs will explode. Nominal interest costs will more than double from $970 billion in 2025 to $2.1 trillion by 2036. As a share of the economy, interest costs will rise from a record 3.2% of GDP in 2025 to 4.6% by 2036.
• Major trust funds are approaching insolvency. The Highway Trust Fund will deplete its reserves by 2028, the Social Security retirement trust fund in 2032, and the Medicare Hospital Insurance trust fund around 2040.
• Deficit projections are higher than last year. CBO now projects $1.4 trillion more borrowing between 2026 and 2035 than it did last January, with $2 trillion of additional net borrowing from policy changes. The reconciliation law alone will add $4.7 trillion to the debt, while tariffs will subtract $3 trillion.
• The economy will surge then normalize, while interest rates will rise. CBO projects real GDP will grow by 2.2% in 2026, due in part to economic stimulus from OBBBA, but slow to 1.8% per year thereafter. They project PCE inflation of 2.7% in 2026, returning to its 2.0% target by 2030. CBO projects short-term interest rates will decline but remain above 3%, while ten-year Treasury yields will grow from 4.1% in 2026 to 4.4% in 2031 and beyond.

With debt approaching record levels, interest costs exploding, trust funds approaching insolvency, and deficits expected to remain more than twice as large as the oft-discussed 3% of GDP target, lawmakers should come together to enact significant deficit reduction.  

Debt Is Approaching Record Levels and Rising Rapidly 

Debt held by the public is currently around 100% of GDP, roughly double the 50-year historical average. Under CBO’s baseline, debt will surpass the 106% of GDP record set after World War II by FY 2030 – just four years from now – and will continue to grow to 120% of GDP by 2036.

In dollar terms, debt held by the public is currently almost $31 trillion and will rise to above $36 trillion in 2028, $47 trillion in 2033, and over $56 trillion in 2036.

Summery from the Committee for a Responsible Federal Budget.