Debt Explosion – February 12, 2026

With the exception of a few articles here and there, some not even domestic, the nonpartisan Congressional Budget Office (CBO) just yesterday released their “The Budget and Economic Outlook: 2026 to 2036” report.

Unsurprisingly the report is damning of government fiscal mismanagement overall, including the current Trump Administration and Congress, the report does contain some staggering statistics of what is in store for this nation.

• For FY2026 the deficit will be around $1.9 trillion, by FY2036 that will grow to $3.1 trillion.
• Federal Spending as a percentage of GDP for FY2026 will be 23.3%, by FY 2036 that is projected at 24.4% (both well above the 50 year average of 21.2%.)
• As of February 12, 2026, the Total Public Debt Outstanding of the United States is $38.74 trillion. Expected to hit $39.58 trillion at FY2026 year end, and projected to be $63.85 trillion by FY2036.
• Deficits, meaning additions to Debt held by the Public and Total Debt, are expected to increase every fiscal year from now until FY2036.
• Federal Reserve’s holdings of debt held by the public is expected to higher than double between FY2026 and FY2036, going from $4.54 trillion to $9.46 in just 10 years.
• Lastly, net outlays in debt servicing (interest payments by schedule) will cross the trillion mark for FY2026 at $1.03 trillion. By FY2036 it will be in the $2.14 trillion range. That is just the cost per year of servicing debt issued.

Before everyone panics…

Just about every projection based report from the CBO is based, arguably, on using today’s numbers as a baseline to start from then considering recent economic events and/or influences on economic activity trends and/or government actions from trade, fiscal, monetary policy, even international considerations.

Meaning, they are usually not entirely accurate going out that far. Too many conditions can change, domestically and internationally, that could have radical impacts on these projections.

All that said, these reports are still a decent barometer of what to expect going forward until conditions change. In most cases talking about all the influences the Federal Government can have on taxation and spending trends, what the Fed can do with monetary policy, down to what the Treasury is going to have to auction just to pull all this off fiscal year to fiscal year. But it also looks at base economic function, business health and employment outlooks. Drivers of the economy.

So, what does this tell us?

For one, neither Republicans or Democrats are all that adept at dealing with fiscal responsibility. Even though an argument could be made that by President and associated Congresses it is Republicans that tend to make things worse but that does not mean Democrats are off the hook. Almost like a useless exercise of asking which is worse, burned by the oven or the stove.

For the purposes of the current Administration and Congress, including what the 2025 Reconciliation Act (“One Big Beautiful Bill” or “OBBB”) is going to do by CBO projections is add a net new $4.7 trillion to Federal Deficits through 2035. Adding roughly $900 billion in additional debt-service costs over the decade, while also accelerating the projected “depletion date” for the Social Security Trust Fund from 2033 to 2032.

Whenever the actual date occurs, that means that Social Security does not “go bankrupt” as often said, but it does lose the legal authority to pay 100% of the scheduled benefits. Current workers’ payroll taxes still happen, and what is collected will be paid out to benefits recipients. The catch is those recipients would see an immediate decrease. Could be as much as 28% out of the gate, and increasing the further Congress does not act.

During the 2024 campaign, Trump and Republicans in Congress addresses this subject, sort of, by saying things like making tax cuts permanent would lead to a “$4 trillion tax increase.” Noticeably the exact opposite was projected by the CBO adding to deficits and debt with no sizable improvements in tax revenues because of the OBBB. Revenue from tariffs did not improve things either, not near enough to be a needle moving result. At some point during the 2024 campaign, Republicans and then-candidate Trump focused on a “pro-growth” definition of fiscal responsibility, arguing that cutting taxes and regulations would stimulate enough economic activity to eventually offset federal deficits. Looking at these projections, one has to really play with the numbers to even make that plausible.

Turns out, we should question the wisdom of tax cuts that benefit the wealthy the most and trying to replace it with regressive tax rates on all of us via tariffs with ambitious goals for the economy. All not very realistic. Not that different than a question for all supply-side driven political based economic theory.

Why so little mainstream media coverage?

Could be as simple as no one gives a shit.

A sentiment that since neither Republicans or Democrats have much care for the fiscal path this nation is on, so perhaps the voter has resigned themselves into thinking neither should they. Perhaps the one area where skepticism of the political norms for both parties has taken over.

Public sentiment of concern on this subject remains. Across the polling as much as 85% of voters agree the President and Congress should spend more time addressing these concerns, 77% think it should be the top priority, 75% think we are on an unsustainable pace, 60% think all of this will get worse, and 52% think there is no end in sight to politicians refusing to address this.

Both divided down political lines on how we ended up here and what to do about this going forward, exactly where Republicans and Democrats seemingly want the nation to be on this and every other issue.

What can be done?

Other that remain skeptical, of course, that anyone on the hill these days has any interest in this subject whatsoever.

Being more serious, if you objectively look at the political climate and conditions of the Federal Government going back 50 years to see when there was the least additions to deficits and debt each fiscal year the results may surprise you.

The most significant period of “fiscal restraint” relatively speaking occurred between 1993 and 2000.

This was all during the time of the 42nd President Bill Clinton (D,) who ended up working with a unified Democratic controlled 103rd Congress (1993–1995), shifting to a divided government where Republicans controlled the 104th to 106th Congresses. Turns out that period of such political fighting between ole Newt Gingrich and Clinton, and the economy riding high on the “dot com” bubble, created fiscal policy impasse where no one really got what they wanted and additions to deficits and debt slowed.

For four of those fiscal years there ended up a Federal Budget surplus, revenues exceeded outlays, where Debt held by the Public fell (even though Total Debt went up because of how Federally ran Trust Funds operate, another conversation for another time.)

In fact, in October 2001 the Treasury Department surprised the markets and the public in suspending selling 30-year bonds, at the time the benchmark for the US bond market going back decades. Because of budget surpluses there was less reason to borrow at longer rates, and until all of it went away by 2006 for a brief period of time the 10-year bond became the new followed metric for the US bond market. 2-year and 5-year bonds became the supplement to deal with temporary General Fund conditions.

A remarkable period where 1998 to 2001 where Debt held by the Public fell, we were issuing less bonds than what matured.

Republicans and Democrats will nitpick over who gets credit for this, sometimes come up with outlandish theories like “Clinton raided the Social Security Trust Fund” and other nonsense but ultimately the Executive Branch and Legislative Branch found a path to throttle each other and avoid making a bigger fiscal mess.

Should we try this again?

“Um, not so sure.”

What that era really taught us is it takes a series of conditions for Federal Government fiscal path to change, not just some political condition of disconnect between a given President and Congress.

Concepts like a booming economy without the resulting bubble pop, as well as other concepts like pay as-you-go-rules where new spending or tax cuts had to be offset by some other spending cuts or tax (revenue) increases. The Budget Enforcement Act of 1990 (signed by Bush 41) and the Omnibus Budget Reconciliation Act of 1993 (signed by Clinton) both had these sort of rules.

A challenge is later Congresses created various mechanisms to avoid these rules, like “wipe the scorecard” provisions in spending bills and way too often used Continuing Resolutions ignoring it all.

Like what happened with the OBBB. Congress handled this with a 2025 waiver to prevent massive cuts to Medicare, so a bill to wipe the “PAYGO” scorecard provision was added that effectively “forgave” with total impunity the $3.4 trillion in new debt added by the OBBB. Nothing else needed to be changed, Congress gave itself and Trump a get out of jail free card, fiscally and legally speaking.

But also gave us the most elegant evidence, that we will ever get, that Republicans damn well knew the OBBB had nothing to do with fiscal responsibility and would come at a fiscal cost. All the rhetoric, waiting mics and cameras down to social media, eating up but it was all straight up lies.

What to consider is a combination of factors. What empowers an economy that benefits everyone and not just the top via supply-side economic theory, and also what throttles Congress (and a President) from basically cheating prior law.

No matter what ends up happening, this is looking like another instance of Congress appeasing a President via dubious means.

With a complicit mainstream media apparatus, coverage and commentary, that has both give up then doubled down by conceding.

CBO Report, for reference:

https://www.cbo.gov/publication/61882

(May want to click on that sooner than later, only a matter of time before the Trump Administration takes it down.)