CBO chief warns it’s ‘probably not plausible’ that a strong economy alone can steady U.S. debt as 5%-6% growth is needed—more than Bessent’s 3% view

Phillip Swagel, director of the Congressional Budget Office, has warned that it is "probably not plausible" that a strong economy alone can stabilize the U.S. debt. Currently, the gross debt stands at $40 trillion, with publicly held debt equal to 100% of GDP. To keep this ratio constant, let alone reduce it, a sustained boom would be required.

The CBO predicts the debt-to-GDP ratio could rise to 120% by 2036. While a robust economy can increase government revenue, it also raises federal spending, which in turn affects Social Security benefits and interest rates. Swagel emphasized that growth will help but is not enough to stabilize the fiscal trajectory. Changes in revenues and spending remain political choices.

When asked if AI can boost economic growth, Swagel mentioned an increase in total factor productivity, but warned that even with stronger growth, the deep budget deficit will remain a challenge. He estimated that nominal GDP growth would need to reach 7%-8% and real GDP growth would have to hit 5%-6% to stabilize the debt, assuming interest rates of 4%-5%. These figures are far higher than current growth rates, which stand at 2.2% for real GDP.