CBO Issues Scary As Hell New Debt Projections That Will Profoundly Impact American’s Economic Future

CBO Issues Scary As Hell New Debt Projections That Will Profoundly Impact American's Economic Future

If Interest Rates Increase by 1 Percent, the National Debt Will be 222 Percent of GDP

Merkley Recently Penned an Op-EdDetailing How the Federal Government Could Get Control of Our Growing Debt and Deficit

WASHINGTON, D.C. - As interest rates continue to skyrocket due to high inflation caused by President Trump's war in Iran and tariffs, the nonpartisan Congressional Budget Office (CBO) responded to a request from U.S. Senator Jeff Merkley (D-OR), Ranking Member of the Senate Budget Committee, detailing that the United States is on a path that is disastrous to our economic wellbeing. If interest rates were to rise even 1 percent above CBO's current projected baseline, the federal debt would grow by an additional $39 trillion to 222 percent of Gross Domestic Product (GDP) over the next 30 years.

CBO's previous analysis was published in May 2025, before the Republican One Big, Beautiful Bill Act (OBBBA) was enacted, making the deficit and debt's growth much worse. At that time, CBO's baseline projected debt to rise to 156% of GDP by 2055. By comparison, this year's projections, made after enactment of the OBBBA estimate debt will rise to 172% of GDP by 2055. Now, if interest rates are only 1% higher than CBO projects, we are looking at a damaging 222% of GDP in 2056.

Such a scenario appears increasingly likely. Interest rates are already about 1 point higher than under CBO's most recent baseline projections. CBO's February 2026 baseline projections assume that the interest rate on a 10-year Treasury bond would average 4.1% during calendar year 2026. Interest rates on the 10-year Treasury bond were 5.2% today.

"This analysis from the Congressional Budget Office should be a five-alarm fire for every Senator and House member. A debt level increase of this magnitude would be playing with fire. We are dancing on the precipice of a debt vortex that would have extremely dangerous consequences for American families. If interest rates are just 1 point higher than the baseline projection, it will cost taxpayers an unfathomable $39 trillion.

"We can start getting our debt under control by reversing the tax giveaways to the ultrawealthy that Republicans made permanent last year. Congress must act to stabilize the debt. It is one of the most important issues we face in setting the foundation for a prosperous future," said Ranking Member Jeff Merkley.

OBBBA stripped health care and food assistance from families to give tax cuts to the wealthy, and is projected to increase the budget deficit by $4.7 trillion through 2035. If expiring provisions are made permanent, the bill will increase the national debt by $30 trillion over the next 30 years. If our debt remains on the growth path it is today, and interest rates are 1% higher, the debt will grow to $207 trillion in 2056.

Key details from CBO's analysis:

• In CBO's baseline, debt as a share of the economy grows to 175% of GDP by 2056. If interest rates were to gradually rise to a level that is 1% higher than baseline, debt will instead rise to 222% of GDP, a 47-percentage point increase, and the economy would be 3% smaller than under CBO's baseline.
• According to today's letter to Sen. Merkley, if Congress were to act to stabilize debt by ensuring it does not grow faster than the economy, the economy would be 1.4% larger after 30 years than under CBO's baseline.

CBO's full analysis is HERE.

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