CBO Chief Says US Debt Stabilization Requires Unlikely Growth

Congressional Budget Office Director Phillip Swagel warned that relying on economic growth alone to stabilize U.S. federal debt is not plausible, even if GDP expands at double its current pace. With gross public debt reaching $40 trillion and the publicly held portion equaling 100% of GDP, maintaining or reducing this ratio would require a massive sustained boom. Swagel estimated that stabilizing the debt-to-GDP ratio under interest rates of 4–5% would necessitate annual real GDP growth between 5% and 6%, while nominal GDP must grow by 7–8%. Although stronger economies increase federal revenue, they also boost wages affecting Social Security outlays and drive up interest costs through higher rates. Swagel noted that the CBO projects the debt-to-GDP ratio will soar to 120% by 2036 despite potential gains from artificial intelligence improving total factor productivity. He emphasized that policy decisions regarding revenues and expenditures remain essential for addressing the fiscal trajectory.