The adjusted baseline shows cumulative deficits are forecast to reach $22.7 trillion, amounting to 6.1% of GDP, with annual deficits climbing from $1.7 trillion in 2025 to $2.6 trillion in 2035. Meanwhile, it sees debt held by the public rising from about 100% of GDP—currently $30 trillion—to 120% of GDP ($53 trillion).

Under the CRFB’s alternative scenario—where key OBBBA provisions are made permanent, tariff revenues fall owing to legal setbacks, and interest rates remain elevated—debt could climb to 134% of GDP by 2035 and the 10-year deficit would exceed $28.5 trillion. Over fiscal years 2026 through 2035, net interest payments alone are set to total $14 trillion over the decade, nearly doubling from $1 trillion this year to $1.8 trillion by 2035.

Expenditures are expected to grow, totaling $88 trillion (23.6% of GDP) for the decade, while revenues—spurred on by tariffs replacing some lost tax receipts—will reach $65 trillion (17.5% of GDP). This persistent gap between spending and revenue underpins the widening deficit. The CRFB has previously weighed in on the tariffs’ impact on deficits, calling them both “significant” and “meaningful.”

Policy changes: OBBBA and tariffs feed fiscal imbalance

Central to the deteriorating outlook is enactment of the One Big Beautiful Bill Act (OBBBA), which the CRFB projects will increase deficits by $4.6 trillion over the next decade and push debt up by more than 10% of GDP by 2035.

Meanwhile, a surge in tariffs following administration policies is expected to offset some costs, saving $3.4 trillion in deficits and reducing debt by 8% of GDP over the same period. These savings are, however, at risk: The U.S. Court of International Trade ruled much of the tariff regime illegal in May, and if that decision stands, tariffs could produce less than $1 trillion in deficit reduction—adding $2.4 trillion to the federal deficit and increasing debt by 5.7% of GDP.

Under the alternative scenario, annual deficit growth would be exacerbated by extensions of tax cuts and spending increases, combined with higher interest on the rapidly rising debt load. Also under this scenario, interest payments on the national debt, already surging from less than $500 billion in 2022, could hit $2.2 trillion (5.1% of GDP) annually by 2035 if interest rates stay high. The CRFB warns the outlook could be even worse if offsets built into OBBBA are delayed and new deficit-increasing proposals—like tariff rebates—are implemented, or if economic headwinds slow revenue collection. A recession or financial crisis over the next decade could further deepen deficits and add to the debt burden.

The CRFB calls for lawmakers to prioritize revenue and spending options that put the federal budget on a sustainable path, emphasizing that any changes to tax and spending policies should be paid for at a minimum under a “pay-as-you-go” approach, and ideally under its own bespoke recommendation of “Super PAYGO,” which would require offsets that exceed new costs twofold. With debt heading toward record levels, the group argues for proactive solutions to trust fund solvency and corrective fiscal action.

Republican leaders and Trump officials argue the OBBBA will reduce the deficit via two mechanisms:

• “Historic spending reductions,” credited in GOP Senate and administration releases with $1.5 trillion to $1.6 trillion in mandatory spending cuts, mainly in social programs.
• Economic growth projections: The White House and GOP claim the bill’s “pro-growth tax reforms” will unleash enough economic expansion to boost tax revenues by $4 trillion, turning a static deficit increase into a dynamic deficit reduction.

No concrete detailed plan has been laid out that would balance the budget if the bill’s tax cuts are extended and the dynamic growth does not materialize.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.