The Congressional Budget Office on Wednesday revised upward its projection for U.S. budget shortfalls over the coming decade, raising the estimate by $1.4 trillion and identifying recent fiscal and policy moves as the main contributors.
In its assessment, the CBO said the president's July fiscal package - which extended the cuts enacted in 2017 and introduced additional tax breaks under the 2025 tax law - is expected to expand deficits by $4.7 trillion across the next 10 years. Separately, the administration's immigration enforcement actions are estimated to add about $500 billion to the deficit over the same period.
The report noted that higher revenues from the administration's import duties provide a countervailing effect. Those tariffs have pushed the average effective tariff rate above 13%, a level the CBO cites as the highest since at least the 1940s according to Bloomberg Economics, and are projected to reduce deficits by $3 trillion in the 10-year window.
Despite the revenue boost from tariffs, the CBO warned that the United States remains on an unsustainable fiscal path. The agency highlighted the growing role of interest payments as a key factor that will widen budget gaps in coming years.
Net interest outlays are forecast to grow sharply, rising from $1 trillion in 2026 to $2.1 trillion in 2036. The CBO attributed this projected increase to the combined effects of a larger stock of federal debt and higher average interest rates.
The CBO's revision integrates these elements - tax legislation, immigration policy, tariff revenue, and interest-cost dynamics - and presents a fiscal outlook in which policy choices and market-driven borrowing costs interact to shape deficits across the next decade.
Clear summary: The CBO raised its 10-year deficit estimate by $1.4 trillion, driven primarily by the 2025 tax law and immigration enforcement; higher tariff revenue is expected to offset some of the increase, while rising interest payments will further widen deficits.