The analysis gives Congress an independent estimate of the budget request as lawmakers weigh the administration’s proposals. It does not make the proposed spending into law. The figures are projections based on specified assumptions, rather than enacted spending levels or final audited results.

A budget request set against large deficits

The CBO analysis comes as the agency’s February 2026 budget baseline projects a $1.9 trillion federal deficit for fiscal year 2026. The baseline also projects $7.4 trillion in federal outlays and $5.6 trillion in revenues during the fiscal year.

Those figures describe the government’s projected overall fiscal position before the longer-term effects of the 2027 request are considered. They provide the backdrop for evaluating whether proposed changes would increase or reduce federal spending and borrowing over time.

CBO projects that debt held by the public will equal 101% of gross domestic product in 2026. By 2036, the agency projects that figure will reach 120% of GDP.

Debt held by the public measures federal debt owed to investors outside the federal government. Comparing the projected share with the size of the economy provides a way to assess the scale of the government’s borrowing burden over the decade covered by the outlook.

Recent budget trends

CBO’s June monthly review estimated that the federal deficit reached $1.4 trillion during the first nine months of fiscal year 2026. That was $35 billion more than the deficit recorded during the comparable period a year earlier.

During those nine months, revenues increased by $142 billion from the same period in the prior fiscal year, while outlays increased by $178 billion. The larger increase in outlays helps explain why the deficit was higher even as the government collected more revenue.

The monthly figures are not the same as the full-year projection. They cover the portion of fiscal 2026 that had elapsed at the time of CBO’s review, while the $1.9 trillion figure is the agency’s projected deficit for the entire fiscal year.

Effects of earlier policy changes

CBO’s broader baseline also estimates that the 2025 reconciliation act increased projected deficits by $4.7 trillion. The agency estimates that higher tariffs reduced projected deficits by $3.0 trillion.

Those estimates are part of the fiscal context surrounding the 2027 budget request. They reflect CBO’s assessment of the budgetary effects of those policies under the assumptions used in its outlook; they are not a statement that the president’s new request has been enacted.

What happens next

The June 30 analysis gives Congress a 2027-to-2036 estimate for the request’s effects on mandatory and discretionary spending. Mandatory spending generally follows eligibility rules and other provisions established in law, while discretionary spending is provided through annual appropriations. The CBO analysis addresses both categories across the 10-year window.

Congress will use the analysis as it considers the president’s budget proposals. Any final spending levels would depend on congressional action and the laws ultimately enacted. Until then, the CBO figures remain estimates of the request’s potential fiscal effects rather than a final federal budget.

The central fiscal pressure identified in the surrounding CBO outlook is the combination of large projected deficits and rising debt. Against that backdrop, the agency’s analysis offers lawmakers a baseline for judging how the administration’s proposed changes could affect federal spending, deficits and debt through 2036.

CBO estimates that the nine-month deficit was $35 billion higher than during the same period in fiscal year 2025. Federal revenues increased by $142 billion, or 4%, while outlays rose by $178 billion, or 3%.

In dollar terms, spending therefore increased more than revenue, even though revenue grew at a slightly higher percentage rate. The deficit is the gap between federal outlays and revenues. It is not the same as the national debt, which reflects borrowing accumulated over time.

What the latest numbers show

The $1.4 trillion figure covers October 2025 through June 2026, the first nine months of the federal fiscal year. July, August and September activity remain outstanding, so the CBO estimate is not the final deficit for fiscal year 2026.

The Treasury Department’s receipts-and-outlays data provide the government’s monthly record of collections and spending used in budget reporting.

For households, the report does not announce an immediate change in taxes, federal benefits or services. Its significance is that continued deficits require additional borrowing and can increase future interest costs, leaving lawmakers with difficult choices among federal programs, public services, taxes and other spending priorities.

The earlier full-year projection

In its February 2026 Budget and Economic Outlook, CBO projected a $1.9 trillion deficit for the full fiscal year.

That figure is an earlier baseline projection, not a final result or an updated estimate based on every later budget action. CBO said the outlook reflected laws and assumptions available at the time, and it did not include all appropriations legislation enacted after the baseline was prepared.

The final fiscal-year deficit will depend on receipts and outlays during the remaining three months, along with subsequent congressional and administrative actions.

Why Congress is back in the spotlight

Key senators unveiled a short-term spending bill on August 2 that would generally fund federal agencies at current levels through December 11, according to the Associated Press. The House has passed a similar measure, but the bills differ over provisions sought by the White House and other conditions attached to funding.

The Senate bill has not been enacted. A Senate vote was expected before lawmakers leave Washington for the August recess, while negotiations over the measure were continuing. If Congress does not approve funding before September 30, affected agencies could face a lapse in appropriations, with consequences for federal workers, contractors and some government services.

A continuing resolution could prevent an immediate shutdown, but it would postpone many of the larger budget decisions. Congress would still need to complete annual appropriations work and address longer-term choices involving spending, revenue and borrowing.

What to watch next

The next checkpoints are Senate action on the short-term bill, the House response, and negotiations before the September 30 deadline. CBO’s next monthly budget update, scheduled for August 10, is expected to add July data and provide a clearer view of the deficit late in the fiscal year.

The central distinction is straightforward: CBO estimates that the government ran a $1.4 trillion shortfall through June, while the final fiscal-year result remains unsettled.

Sources

• Monthly Budget Review: June 2026 — Congressional Budget Office
• Senate leaders reach short-term funding deal to avoid shutdown — Associated Press

GAO’s report, published as “The Nation’s Fiscal Health: Urgent and Sustained Action Needed to Improve the Fiscal Outlook” (GAO-26-108610), frames the problem in “current policy” terms: if policymakers do not change course, publicly held debt would rise faster than the economy and interest costs would take up a growing share of federal spending. GAO also urges Congress and the Administration to coordinate on a long-term strategy backed by fiscal targets or rules and to address financing gaps tied to Social Security and Medicare.

What changed in the new GAO report

GAO’s annual fiscal-health release is not new as a concept, but its emphasis is pointed for this cycle: the report focuses on debt sustainability and how rising interest payments can crowd out other priorities over time. GAO also notes that its projections are based on current policy and are meant for evaluating policy options—not as guaranteed outcomes.

In GAO’s framing, debt held by the public is the key measure because it represents borrowing from sources outside the federal government—including private investors and foreign holders. When that debt grows faster than GDP, the debt burden rises and interest costs become harder to manage.

The key numbers GAO is warning about

GAO reports that at the end of fiscal year 2025, debt held by the public was 99% of GDP. Under current policies, GAO projects debt would reach 123% of GDP in 2036 and about 251% of GDP over the long term.

GAO also projects that net interest spending—interest costs on the debt held by the public, net of interest income—would climb to almost 10% of GDP by 2056. GAO further notes that net interest costs were 3.2% of GDP at the report’s baseline and that net interest is now one of the largest categories of federal spending.

GAO’s press release adds a near-term reader-relevant detail: it says the government spent almost $1 trillion on interest last year, and interest spending is projected to keep growing.

Why the interest-cost driver can matter for families and businesses

GAO’s core policy message is that rising net interest costs change the tradeoffs federal lawmakers face. As interest payments grow, more budget room gets “used up” by the cost of financing prior deficits—reducing flexibility for other spending priorities or making it more difficult to stabilize debt without significant policy changes.

GAO also warns that the broader economic pathway can show up as higher borrowing costs and potential pressure on wages and prices. The link is indirect—GAO is not claiming a single tax bill or a single federal program will immediately raise costs the next time a household pays a credit card bill—but the report’s logic is that sustained debt growth can contribute to higher interest rates and therefore higher interest costs for the government and, ultimately, the wider economy.

What GAO wants Congress and the White House to do next

GAO urges “immediate action” and says durable progress will require coordination between Congress and the Administration. In GAO’s outline, that includes:

• Adopting a fiscal target and rules to encourage fiscal discipline
• Addressing urgent financing shortfalls in the Social Security and Medicare trust funds
• Evaluating revenue and spending policies to ensure they can support the nation’s long-term fiscal obligations

GAO also points to financing gaps in Social Security and Medicare: it discusses trust funds being projected to be depleted in the early 2030s, after which scheduled benefits would not be fully covered without new legislation. The report also says the current debt limit process should be restructured as part of the broader effort to manage the debt and interest-cost drivers.

What to watch from here

GAO is not making law, but the report is a roadmap for what to look for in the next wave of federal budgeting and fiscal negotiations. Key watch items include whether lawmakers and the Administration:

• Adopt fiscal targets or rules that set measurable benchmarks for debt or deficits
• Include specific proposals to close Social Security and Medicare financing gaps
• Respond to GAO’s emphasis on net interest costs in budget choices—especially how future spending and revenue plans would affect the debt and interest trajectory

If policymakers wait, GAO warns that adjustments needed to reach sustainability goals can become larger and more difficult later. That is the practical reason for the report’s urgency: the interest-cost pressure builds as debt and borrowing needs compound under current-policy assumptions.

Sources

• GAO press release — America’s unsustainable fiscal path (June 11, 2026)