A financial watchdog group is warning that the U.S. debt could ‘explode’ if tax policies under discussion in the White House and Congress are enacted.
During a closed-door meeting with House leaders on Thursday, President Donald Trump outlined his plans. Trump’s plans included extending the expiring pieces of the 2017 Tax Cuts and Jobs Act, expanding the State and Local Tax (SALT) deduction, and tax breaks for goods made in America. Trump also wants to cut taxes on income from tips, overtime pay, and Social Security benefits and eliminate tax breaks for carried interest and stadium owners.
The nonpartisan Committee for a Responsible Federal Budget estimates that those policies would reduce revenue by $5 trillion to $11.2 trillion over the next decade. That could “dramatically boost interest costs, and increase the risk of a debt spiral,” according to the CFRB analysis.
“No discussion of further offsets – either on the tax or spending side – has been reported,” the analysis noted. “Without offsets, debt under this proposal would rise from 100% of GDP at the beginning of 2026 to at least 132% of GDP and as much as 149% of GDP – nearly double or triple the growth over the next decade expected under current law to 118% of GDP.”
Gross Domestic Product, or GDP, is a measure of economic output.
CFRB said the plan “could boost interest costs by $1.2 to $2.7 trillion over the next decade, driving annual net interest payments to record highs and risking a serious debt spiral.”
The policies under discussion match many of Trump’s campaign promises in the run up to the 2024 election, but don’t square with some of his other promises. For example, in December Trump promised to cut “hundreds of billions” in federal spending in 2025 through the reconciliation progress. On Friday, Trump posted “balanced budget” in all capital letters followed by three exclamation marks on Truth Social. He signed the post with his initials.
Congress has run a deficit every year since 2001. In the past 50 years, the federal government has ended with a fiscal year-end budget surplus four times, most recently in 2001.
CFRB urged a more nuanced approach.
“The proposals would send federal debt to levels unprecedented in our history within only a few years,” according to the analysis. “Policymakers should scale back and more carefully target their tax agenda and ensure that any tax cuts are part of a package to lower deficits. There are plenty of offsets available. Reconciliation should reduce, not add to, budget deficits.”
Trump’s talks with GOP leaders came the same day as the U.S. Government Accountability Office urged Congress to find a new path going forward.
The GAO, which serves as Congress’ research arm, warned that unchecked spending could push public debt to 219% of GDP by 2051 and create significant economic and national security risks.
“We project that public debt will reach an unprecedented level by 2027,” said Gene Dodaro, U.S. Comptroller General and head of the GAO. “We’re calling on Congress and the Administration to act now to develop and implement a strategy to address this acute challenge. Inaction could result in great difficulties for many Americans and impede policymakers’ flexibility to respond to future economic recessions or unexpected events.”
