CBO director says growth alone cannot stabilize U.S. debt
Congressional Budget Office Director Phillip Swagel said faster economic growth will not be enough to keep U.S. debt under control. He estimated that stabilizing the debt would require real GDP growth of 5% to 6%, far above recent levels and Treasury Secretary Scott Bessent's 3% target. Swagel added that addressing the fiscal path would ultimately require political decisions on revenue and spending.
At a Minneapolis Fed event, CBO Director Phillip Swagel said economic expansion alone cannot steady federal finances. Gross debt stands at $40 trillion, with publicly held debt equal to GDP, and CBO expects the debt-to-GDP ratio to reach 120% by 2036.
Swagel noted growth raises revenue but also lifts Social Security outlays and interest rates. He estimated stabilizing debt might need 5%-6% real GDP growth, versus 2.2% recently and Treasury Secretary Scott Bessent's 3% target. AI-driven productivity gains may help, but CBO's coming forecasts are unlikely to close the gap.
If debt trajectory persists, higher long-term yields may pressure borrowing costs for households, businesses, and governments. That could crowd out private investment, slow wage growth, and make public programs harder to sustain. Younger and lower-income people may bear disproportionate risk if adjustments fall on taxes or benefits. However, outcomes depend on future policy choices and market reactions, so effects remain uncertain.