The Congressional Budget Office raised its 10-year deficit estimate by $1.4 trillion, citing Trump's 2025 reconciliation act, higher tariffs and lower immigration.

Annual deficitsare projected to remainhistorically large, totaling $23.1 trillion from 2026 to 2035 and reaching 6.7% of GDP by 2036.

The 2025 tax law is the single largest driver, adding $4.7 trillion to deficits over the decade, partially offset by roughly $3 trillion in tariff revenue.

Federal debt held by the public is projected to rise to 120% of GDP by 2036, surpassing the post-World War II record by 2030.

Interest costs are expected to double over the next decade, climbing from $1 trillion in 2026 to $2.1 trillion in 2036 as debt and rates rise.

Economic growth is projected to strengthen in 2026 but slow to 1.8% thereafter, falling short of the administration’s 3% growth target despite productivity gains from artificial intelligence.

The federal government is barreling toward a decade of historically large budget deficits, according to a new report from the (arguably partisan) Congressional Budget Office (CBO), which said on Wednesday in a newreportthatrecent tax and immigration policies have sharply worsened the long-term outlook.

The CBO increased its estimate of cumulative deficits for the 2026-35 period by $1.4 trillion, citing President Donald Trump’s 2025 tax law and the cost of stepped-up immigration enforcement. The agency now projects total deficits of $23.1 trillion over the decade, underscoring what it called an “unsustainable fiscal path.”

At the center of the revision is last summer’s tax package, which extended the 2017 tax cuts and added new breaks. The CBO estimatesthe law will increase deficits by $4.7 trillion over 10 years. Immigration enforcement actions are expected to add another $500 billion. Those costs, the agency said, will more than offset revenue gains from higher tariffs, even as import duties rise to levels not seen since the mid-20th century. The CBO estimates tariff revenue will reduce deficits by about $3 trillion over the period.

Since its last long-term outlook in January 2025, the agency said three developments have materially altered its baseline projections: enactment of the 2025 reconciliation act, a sharp rise in tariffs, and lower immigration. Together, those changes have pushed projected deficits for the coming decade $1.4 trillion higher, to a cumulative $23.1 trillion from 2026 through 2035.

Source: ZeroHedge News