Faster economic growth can help the United States manage its debt, but it is unlikely to stabilize the federal debt trajectory by itself, according to Congressional Budget Office Director Phillip Swagel, as quoted by Bloomberg Government News. CBO’s 2026 baseline shows why: debt held by the public, deficits, and net interest costs are all projected to rise as a share of the economy.
What did the CBO director say about growth and debt?
Bloomberg Government News reported on October 8, 2026, that Swagel made the remarks at an event in Minneapolis. The outlet quoted him as saying, “Growth will help, but it’s probably not plausible that growth alone will stabilize our fiscal trajectory,”. The quotation and event details are attributable to that report; an official transcript or recording was not available to independently establish the full context.
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The warning is about growth as a stand-alone solution, not about growth being useless. A stronger economy can support tax receipts and increase the size of the economy against which debt is measured. But debt dynamics also depend on federal spending, revenues, and interest costs. Faster growth does not automatically change those budget choices.
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What does CBO project for federal debt?
CBO’s March 2026 testimony projects debt held by the public at 101% of GDP in 2026 and 120% in 2036. CBO identifies 106% of GDP in 1946 as the previous historical high, so its projected 2036 level would exceed that mark. These are baseline projections, not observed future outcomes or a forecast of a crisis on a particular date. See the CBO testimony, “The Budget and Economic Outlook: 2026 to 2036”.
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“Debt held by the public” is the measure in these figures; it should not be confused with gross federal debt, which is a broader measure. CBO’s baseline incorporates laws in place as of January 14, 2026. Its economic forecast reflects trade policy as of November 20, 2025, and economic developments and laws as of December 3, 2025. Later developments may therefore differ from the assumptions behind these estimates.
Why might growth not be enough?
Growth can improve the ratio without closing the budget gap
Debt-to-GDP compares the amount of debt held by the public with the economy’s annual output. If GDP grows more quickly, the denominator can rise, and stronger economic activity can also support revenues. Those effects are helpful, but they do not necessarily erase the gap between federal spending and revenue or prevent interest costs from accumulating.
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Deficits and interest costs are also projected to rise
CBO’s February 2026 baseline projects the federal deficit at 5.8% of GDP in 2026 and 6.7% in 2036. Net interest payments are projected to rise from 3.3% to 4.6% of GDP over those same years. These figures are conditional on the baseline’s laws and assumptions, not guaranteed results. The projections and policy discussion appear in CBO’s 2026–2036 budget and economic outlook.
When deficits persist, the government must borrow to cover the difference, while interest on existing debt adds to future budget demands. Growth can make that burden easier to manage relative to the economy, but the CBO figures illustrate why growth alone is not equivalent to balancing the budget or halting debt growth.
What does CBO say lawmakers would need to do?
CBO says that avoiding the consequences of large and growing federal debt would require significant changes to tax and spending policies: increasing revenues, reducing spending, or using some combination of the two. In its March 2026 testimony, the agency states: “To avoid the consequences of large and growing federal debt, lawmakers would have to make significant changes to tax and spending policies—increasing revenues, reducing spending, or adopting some combination of those approaches.” CBO also says the size of the changes needed grows the longer lawmakers delay action.
This describes a policy choice, not a specific prescription for which taxes to raise or which programs to change. The cited CBO material explains the broad levers and the rising scale of adjustment; it does not establish one particular package as the required solution.
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How should the reported AI-growth forecast factor into the debate?
Bloomberg Government News also reported that CBO expected to upgrade its growth forecast in its next projections, then anticipated in January or February, with effects from an AI boom incorporated. That was a reported expectation as of October 8, 2026—not a published CBO forecast in the cited baseline. Even a stronger growth outlook would need to be assessed alongside projected deficits, interest costs, and policy assumptions before concluding that growth can stabilize debt on its own.
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