Committee for a Responsible Federal Budget President Maya MacGuineas discusses tariff revenue and how President Donald Trumps tax bill will affect the deficit on Mornings with Maria.
The U.S. government’s budget deficits are now projected to worsen throughout the next decade when compared with earlier forecasts this year, according to a new report by the nonpartisan Committee for a Responsible Federal Budget (CRFB).
CRFB published an updated budget baseline as of August 2025 that incorporates the enactment of Republicans’ One Big Beautiful Bill Act (OBBBA) along with the Trump administration’s new framework for tariffs to account for legislative and administrative changes, though it doesn’t include economic changes.
Under the updated baseline, CRFB projects that the national debt held by the public will rise from about 100% of gross domestic product (GDP) in 2025 to 120% of GDP by 2035. In dollar terms, that would see the debt held by the public rise from $30 trillion today to $53 trillion in 2035.
In that timeframe, annual budget deficits are expected to rise from $1.7 trillion in 2025, or 5.6% of GDP; to $2.6 trillion, or 5.9% of GDP, in 2035. Overall, deficits are expected to total $22.7 trillion over the decade, averaging 6.1% of GDP in that period.
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Federal budget deficits and the national debt are projected to grow at a faster rate under CRFB’s analysis. (Demetrius Freeman/The Washington Post via Getty Images / Getty Images)
Higher interest costs on the national debt account for a significant portion of the increase, as net interest payments are expected to rise from $1 trillion in 2025 to $1.8 trillion in 2035, rising from 3.2% of GDP to about 4.1% of GDP.
Over the next decade, federal spending is projected to total $88 trillion, or 23.6% of GDP, while tax revenue will be over $65 trillion, or 17.5% of GDP.
Federal spending is well above the historical average of 21.1% of GDP over the next 50 years, while revenue is slightly above the 50-year average of 17.3%.
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Compared with the baseline released by the nonpartisan Congressional Budget Office (CBO) in January, total deficits would be about $1 trillion higher while the debt-to-GDP ratio would be about 2 percentage points higher.
That’s due in part to the cost of OBBBA being partially offset by tariff revenue and other reforms in the first five years, and most offset in the following five years.
CRFB also analyzed an alternative scenario under which the U.S. Court of International Trade’s ruling that a significant portion of the administration’s tariffs are illegal is upheld on appeal. The scenario also assumes temporary provisions of the OBBBA, like tax relief for tipped income and overtime, are made permanent and Treasury yields remain at current levels.
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Tariffs are taxes on imports that are paid by importers, who typically pass some or all of the higher costs on to consumers through higher prices. (Photo by Spencer Platt/Getty Images / Getty Images)
Under that alternative scenario, deficits would total $28 trillion over the next decade, with annual deficits reaching up to $3.4 trillion by 2035, or 7.8% of GDP, and net interest costs totaling $2.2 trillion that year. It would also see the debt-to-GDP ratio surge to 134% of GDP.
Under the alternative scenario, total deficits over the next decade would be $5.3 trillion higher than under the CRFB’s baseline.
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Federal spending would reach 24.8% of GDP in 2035, while revenues would be lower at 16.9% of GDP that year due to reduced tariff revenue, higher interest costs and extensions of tax cuts and spending increases.
