Doubts have intensified surrounding claims of a “new golden age of prosperity” in the U.S., as articulated by former President Donald Trump on President’s Day. The recent Supreme Court ruling, which negated a substantial portion of Trump’s tariffs, has further darkened an already challenging economic outlook.
In mid-February, the Congressional Budget Office (CBO) unveiled new 10-year budget forecasts that painted a considerably bleaker picture than the already troubling analysis provided a year prior. The CBO’s findings indicate that the combination of tax cuts and increased spending from the One Big Beautiful Bill will exacerbate the persistent shortfalls between federal revenue and expenditures. These shortfalls are projected to overshadow any temporary benefits from tariffs or the current surge in GDP.
The pivotal issue at hand is the escalating interest expenses associated with the national debt. Growing deficits heighten the cost of borrowing, leaving less room in the budget for essential programs such as Medicare and national defense. In less than a decade, these expenses are expected to grow to the size of nearly half of the average American household’s monthly mortgage payment.
The CBO’s annual report, titled “The Budget and Economic Outlook,” offers a comprehensive assessment of federal spending, revenue, GDP, interest rates, and deficits over a decade. The latest update, which covers the period from 2026 to 2036, reveals “primary deficits” that significantly exceed those predicted in the previous year’s report. A primary deficit represents the difference between tax revenues and expenditures exclusive of interest costs.
Such widening deficits signal increasing reliance on borrowing to fund governmental spending. The U.S. must continuously borrow the necessary funds to bridge the gap between its revenues and expenses, a cycle that inflates interest costs and drives total deficits even higher.
In 2025, the federal government is anticipated to spend over $6 trillion, yet it will only collect approximately $5.2 trillion in revenue, necessitating $805 billion in borrowing to cover the shortfall. This figure adds to the national debt, compounded by approximately $30 billion in new interest accrued from the shortfall.
The CBO projects that the Trump-backed 2025 Reconciliation Act—affectionately labeled the One Big Beautiful Bill—will magnify the already dire fiscal trajectory. The legislation includes various tax breaks, notably exemptions for overtime and tips, a $6,000 deduction for seniors over 65, an expanded Child Tax Credit, and the permanence of tax rate reductions established during Trump’s initial term. Additionally, it proposes significant spending increases, particularly in defense and homeland security. The CBO estimates that this bill alone will contribute an increase in deficits totaling $3.4 trillion through 2035, with the aggregate impact rising to $4.1 trillion when accounting for immigration restrictions that may shrink the workforce and further inflate interest costs.
Initially, the CBO anticipated that the Trump tariffs would provide an offset, generating revenues of $2.7 trillion over the same period. However, this estimate is now likely to be revised upward in light of the recent court ruling, which undermined the tariff framework. As a result, anticipated increases in deficits from Trump’s policies could amount to $1.4 trillion, marking a 9% rise over a nine-year timespan.
Moving forward to 2035, the CBO’s outlook suggests a deficit soaring to $2.96 trillion, or 6.2% of GDP, compared to 5.8% today. Debt held by the public is expected to balloon from $30.2 trillion in 2026 to $53.1 trillion, reaching a staggering 116% of GDP. Just a year ago, projections foresaw a 2035 deficit nearly 10% lower than the current estimate, illustrating a notable deterioration in fiscal expectations.
Importantly, the CBO does not foresee a robust and sustained acceleration in economic growth. While it raised its growth estimate for fiscal year 2026 from last year’s prediction of 1.8% to 2.2%, this is expected to revert to a modest 1.8% annual growth over the following nine years. Factors such as an aging population, restrictive immigration policies, and tariffs are anticipated to counterbalance any potential benefits from tax cuts that could encourage consumer spending.
Interestingly, interest expenses are projected to emerge as the fastest-growing component of federal expenditure. While the CBO’s baseline forecasts cap discretionary spending—including defense, education, and transportation—at current levels over the next decade, incorporating a realistic growth scenario tied to GDP would potentially elevate interest expenses from $970 billion to $2.2 trillion. This marks a staggering increase of 115%, highlighting a significant escalation of costs associated with carrying the national debt.
By 2036, interest expenses alone could total about $15,700 for every household in the U.S., translating to monthly costs nearing $1,300. This is comparable to half of what typical families pay in mortgage payments for homes valued around $500,000. The trend suggests that the U.S. government is “mortgaging” citizens’ futures, effectively increasing its financial burden while households are often required to practice fiscal restraint.
As the situation unfolds, it becomes clear that Washington may need to learn from American homeowners who understand the limits of spending relative to earnings. While families manage their finances responsibly, the government’s budget strategy appears increasingly reliant on cycles of refinancing and accruing further debt—placing a heavier burden on future generations.
