CBO forecast shows Trump’s economic policies are worsening the country’s fiscal picture
Published Wed, Feb 11, 2026 · 11:54 PM
[WASHINGTON] The US budget deficit will grow slightly in fiscal 2026 to US$1.853 trillion, the Congressional Budget Office (CBO) forecast on Wednesday (Feb 11), showing that on balance, President Donald Trump’s economic policies are worsening the country’s fiscal picture amid low economic growth.
The CBO said that the deficit for fiscal 2026 will be about 5.8 per cent of GDP, about where it was in fiscal 2025, with a deficit of US$1.775 trillion.
But the US deficit-to-GDP ratio will average 6.1 per cent over the next decade, reaching 6.7 per cent in fiscal 2036 – far above US Treasury Secretary Scott Bessent’s goal to shrink it to around 3 per cent of economic output.
A major difference is that the CBO forecasts rely on significantly lower economic growth projections than the Trump administration, pegging 2026 real GDP growth at 2.2 per cent, fading to an average of about 1.8 per cent for the rest of the decade. Trump administration officials have said in recent days that first-quarter 2026 growth could top 6 per cent due to rising investments in factories and artificial intelligence data centres.
The fiscal 2026 deficit is about US$100 billion or 8 per cent more in CBO’s current projections than it was in the agency’s January 2025 projections, and the cumulative deficit over the 2026-2035 period is US$1.4 trillion, or 6 per cent greater.
Trump’s “One Big Beautiful Bill” that extended 2017 tax cuts and slashed outlays on social programmes such as Medicaid, will boost consumer spending and private investment this year, CBO said. That legislation will add US$4.7 trillion to US deficits over the 10-year budget window, while reduced immigration will add another US$500 billion, according to the forecasts.
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Added revenue from Trump’s tariffs will reduce deficits by about US$3 trillion, including economic effects and lower debt payments, CBO said.
The impact of an expected productivity boost from artificial intelligence, a linchpin of administration demands for lower interest rates adopted as well by Fed chair nominee Kevin Warsh, is estimated at a nominal 10 basis points per year of additional economic output in the CBO report.
Interest rates on 10-year Treasury notes remain roughly where they are now or a little higher, a blow to Trump hopes for cheaper consumer borrowing costs, with the Federal Reserve seen making only a single quarter-point rate cut this year, even with Warsh potentially leading the central bank by June. REUTERS
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