TL/DR –
The Committee for a Responsible Federal Budget (CRFB) has released an adjusted 2025 baseline that reflects the estimated impact of the One Big Beautiful Bill Act (OBBBA), new tariffs, and other changes. Under the CRFB baseline, the public debt is predicted to rise from about 100% of GDP ($30 trillion) today to 120% of GDP ($53 trillion) by 2035, while the total deficits over the next decade are expected to reach $22.7 trillion, 6.1% of GDP. In an alternative scenario where the US Trade Court ruling that much of the tariffs are illegal is upheld and temporary OBBBA provisions are made permanent, the debt is projected to reach 134% of GDP.
Key Developments in US Fiscal Outlook: 2025 CRFB Adjustments
Recent legislative changes in the United States, specifically the initiation of the One Big Beautiful Bill Act (OBBBA), as well as the implementation of a new tariffs framework, have significantly reshaped the country’s fiscal outlook. In comparison to the Congressional Budget Office’s (CBO) January 2025 baseline, this article explores the CRFB Adjusted August 2025 Baseline, which encapsulates the aforementioned revisions but excludes economic and technical changes.
Future Projections and Estimations
Based on the CRFB Adjusted August 2025 Baseline, which assumes the preservation of current tariffs and trade agreements for the Fiscal Year (FY) 2026 through FY 2035, several key financial estimates can be made:
- Public debt will escalate from its current state, equating to roughly 100 percent of the country’s Gross Domestic Product (GDP) or $30 trillion, to 120 percent of GDP ($53 trillion) by 2035.
- Deficits will amass to a total of $22.7 trillion (6.1 percent of GDP) over a decade, and will rise from $1.7 trillion (5.6 percent of GDP) in 2025 to $2.6 trillion (5.9 percent of GDP) in 2035.
- Net interest payments on the national debt will amount to $14.0 trillion (3.8 percent of GDP), increasing from around $1 trillion (3.2 percent of GDP) in 2025 to $1.8 trillion (4.1 percent of GDP) in 2035.
- Spending over the decade will be $88 trillion (23.6 percent of GDP) while revenue will exceed $65 trillion (17.5 percent of GDP).
- The total deficit will be around $1 trillion higher than the CBO’s January baseline. The debt-to-GDP ratio will see an additional 2 percentage point increase. The high cost of OBBBA will be somewhat offset by new tariffs and other reforms over the first five years and predominantly offset in the succeeding five.
CRFB August 2025 Alternative Scenario
In the event that the U.S. Trade Court upholds its ruling that most tariffs are illegal, temporary measures of OBBBA are maintained, and yields on Treasury securities keep at their current level, the debt will reach 134 percent of GDP; the total ten-year deficit will surpass $28 trillion; and by 2035, interest payments will grow to $2.2 trillion, exceeding 5 percent of GDP.
Further Adjustments to the 2025 Baseline
Under the CRFB Adjusted August 2025 Baseline, it is estimated that debt will rise from 100 percent of GDP at the end of 2025 to a record 107 percent of GDP by 2028 and 120 percent of GDP by 2035. This is 2 percent higher compared to the CBO’s January 2025 baseline prediction. The debt could potentially escalate to as much as 134 percent of GDP under the CRFB August 2025 Alternative Scenario, which assumes a permanent OBBBA, revenues from legal tariffs only, and long-term interest rates maintaining their current levels.
Deficits and Interest under the CRFB Adjusted August 2025 Baseline
According to the same baseline, deficits for the period FY 2026 to 2035 are projected to total $22.7 trillion (6.1 percent of GDP), growing from $1.7 trillion in 2025 to $2.6 trillion by 2035. As a percentage of the economy, deficits will increase from 5.6 percent of GDP in 2025 to a peak of 6.5 percent in 2033, before reducing to 5.9 percent in 2035. Furthermore, due to the growth in both the nation’s debt and the average interest rates on total debt, interest payments are set to increase significantly. Interest costs will rise from 3.2 percent of GDP in 2025 to a record 4.1 percent by 2035.
Spending and Revenue under the CRFB Adjusted August 2025 Baseline
The large deficits under the CBO’s baseline can be attributed to a disparity between spending and revenue. Specifically, spending over the decade is expected to total $88 trillion (23.6 percent of GDP), while revenue will exceed $65 trillion (17.5 percent of GDP). Spending, which increased from 20.9 percent of GDP in 2019 to 23.4 percent in 2024, is projected to rise over the decade from 22.8 percent of GDP in 2025 to 23.6 percent in 2035. Revenue is also set to increase over the decade, from 16.3 percent of GDP in 2019 to 17.7 percent in 2025, and further to 17.7 percent of GDP by 2035, as tariffs replace some of the revenue from the OBBBA tax cuts and many of the temporary OBBBA tax cuts expire.
—
Read More US Economic News