Federal spending also boosts growth, which lifts wages that in turn affect outlays on Social Security benefits, he pointed out. A robust economy also tends to send interest rates higher, which adds to debt interest costs.<\/p>\n
\u201cSo growth will help, but it\u2019s probably not plausible that growth alone will stabilize our fiscal trajectory,\u201d Swagel added. \u201cSo then we\u2019re left with changes in revenues and changes in spending, and those are inherently political choices.\u201d<\/p>\n
Minneapolis Fed President Neel Kashkari asked if AI can help supercharge economic growth, and he replied that CBO has detected an increase in total factor productivity, which measures the efficiency of labor, capital, and other inputs.<\/p>\n
The CBO\u2019s next batch of economic forecasts due early next year will incorporate its views on AI, Swagel said, adding that future growth will be stronger. Still, the budget deficit is so deep that even the extra AI-powered growth won\u2019t be enough, he warned.<\/p>\n
Kashkari then asked how much faster growth would have to be in order to stabilize the debt. Swagel cautioned against doing arithmetic on the fly but offered some back-of-the-envelope numbers.<\/p>\n
Assuming interest rates of 4%-5%, he estimated that nominal GDP growth would have to reach 7%-8% and real GDP growth would have to hit 5%-6%. <\/p>\n
That\u2019s more than double the latest real GDP pace of 2.2% in the second quarter. Meanwhile, even bullish Wall Street forecasts put full-year GDP growth at 2.5%.<\/p>\n
The rough numbers from the CBO chief also far exceed what Treasury Secretary Scott Bessent said would be needed to overcome the debt.<\/p>\n
\u201cWith 3% growth, we grow our way out of this,\u201d he said at Southern Methodist University last month. \u201cWe\u2019ll get to the other side of this Iran conflict, and the underlying economy is very, very strong, and I think reaccelerating.\u201d<\/p>\n
Meanwhile, other estimates fall somewhere in between. According to the Penn Wharton Budget Model, growth would have to average 3.5%-4% over a decade to maintain the debt-to-GDP ratio.<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/10\/GettyImages-2292882817-e1791672588405.jpg\"\/)
The current U.S. national debt on August 30, 2026 in Washington, DC.<\/p>\n
Jemal Countess\/Getty Images for the Peter G. Peterson Foundation<\/p>\n
Swagel also noted that an economic shock that sends interest rates up suddenly would set off a vicious fiscal cycle.<\/p>\n
\u201cSo there\u2019s almost like a turbocharger,\u201d he explained. \u201cAn interest rate shock feeds into the deficit, feeds into the debt, feeds back into interest rates.\u201d<\/p>\n
So far, the bond market is absorbing all the debt the U.S. Treasury is issuing to fund the budget deficit, but long-term yields have surged to the highest levels in 24 years. <\/p>\n
Some of that is due to the strong economy, expectations for Fed rate hikes, high oil prices keeping inflation high, and the flood of AI hyperscaler debt competing for bond market demand.<\/p>\n
But the enormous scale of U.S. debt is also a factor. Swagel said it\u2019s small now, with a 1-percentage-point increase in the debt ratio leading to a 0.015-percentage-point hike on long-term interest rates.<\/p>\n
\u201cSo it\u2019s modest, but the fiscal trajectory is really quite challenging,\u201d he added. \u201cIt adds up, and of course there\u2019s that turbocharger type effect that I mentioned where it feeds back into deficits.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Congressional Budget Office Director Phillip Swagel said faster economic growth is unlikely to keep U.S. debt in check,…\n","protected":false},"author":2,"featured_media":878167,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[5849,28,3055,2447,1556],"class_list":["post-878166","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-budget-deficit","tag-business","tag-debt","tag-economic-growth","tag-gdp"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/878166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=878166"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/878166\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/878167"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=878166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=878166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=878166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}