CBO Forecast: U.S. Deficit Steady Before Trump's Inauguration

The Congressional Budget Office anticipates a $1.865 trillion U.S. budget deficit for fiscal 2025, signaling stable government finances as Trump's term begins. Extending tax cuts could increase deficits significantly without compensatory measures. Projections include a cumulative 2026-2035 deficit of $21.758 trillion, with economic growth expected at 1.9%.

The Congressional Budget Office (CBO) has projected the U.S. budget deficit for fiscal year 2025 to be $1.865 trillion, aligning closely with last year's figures and suggesting stable government finances as President-elect Donald Trump prepares to take office.

The estimates are built on existing legislation, anticipating the expiration of Trump's individual tax cuts in 2017, which would result in a return to higher tax rates. Efforts to extend these cuts could potentially add $4 trillion to the deficit over the next decade if savings elsewhere are not found. Additional cuts such as those exempting Social Security and tip income from taxes could further increase debt.

The CBO indicates deficits may drop slightly to $1.687 trillion by 2027 yet could rise to $2.637 trillion by 2033. The 2026-2035 period could witness a cumulative deficit of $21.758 trillion. The report attributes the largest deficit reduction to increased income tax revenues. It also forecasts a modest slowdown in U.S. economic growth, estimating a rate of 1.9% in 2025.

(With inputs from agencies.)