Portugal faces the possibility of resuming perennial budget deficits, as economists voice discordance and both national and international institutions express pessimism.
By Sonia M. Lourenço
The fiscal outlook for the United States from 2025 through 2026 presents a complex picture, with a surplus in 2025 appearing unlikely and rising fiscal pressures contributing to growing deficits by 2026.
In the first 10 months of fiscal year 2025, the Congressional Budget Office (CBO) estimates a federal budget deficit of approximately $1.6 trillion. Although receipts increased by 6%, outlays rose by 7%, reflecting rising spending pressures [1]. This suggests that the budget was in deficit, not surplus, in 2025.
The 2025 Budget Reconciliation Act, also known as the One Big Beautiful Bill Act (OBBBA), includes tax cuts and spending changes projected to lower overall tax revenues by about 1.5% of GDP starting in 2026. This reduction in tax revenues can significantly impact federal revenues [2]. While specifics on IRS cuts and pensioner bonuses are not detailed in the search results, the OBBBA could potentially involve such measures.
Increased defense spending is another factor contributing to the rising outlays. Although the results do not provide explicit figures for defense spending increases, federal outlays overall are rising, indicating increased spending pressure, potentially from defense and other sectors [1].
The OBBBA is projected to increase federal debt by roughly $4.2 trillion (9% of GDP) by 2034 due to its spending and tax policies. This increase in debt will lead to persistent budget deficits and higher debt-to-GDP ratios, rising from 117% to 126% by 2034. This reflects chronic deficits set to begin or worsen around 2026 due to new fiscal measures [2].
The Council of Economic Advisers (CEA) projects nominal revenues growing from approximately $5.3 trillion in 2025 to $5.55 trillion in 2026. However, this growth may be offset by the reduction in tax rates and spending increases [3].
Federal debt reached $37 trillion in mid-2025, marking a rapid increase over recent years. Although welfare reforms in OBBBA aim to slow some spending growth, overall federal spending is expected to outpace economic growth, facilitating ongoing deficits and debt accumulation [5].
In conclusion, despite some revenue growth in 2025, rising outlays—including defense spending—and enacted tax reductions mean the U.S. is unlikely to see a surplus in 2025. New measures under the 2025 Budget Reconciliation Act are projected to reduce revenues and increase deficits from 2026 onward, contributing to chronic deficits and continued debt growth over the next decade [1][2][5].
National and international organizations are pessimistic about the future budget situation, and economists predict a budget surplus in 2025 may not materialize as previously anticipated. It is essential to monitor these trends closely to understand the long-term implications for the U.S. economy.
References:
[1] Congressional Budget Office. (2025). Monthly Budget Review: Budget Deficit for First 10 Months of Fiscal Year 2025 Reaches $1.6 Trillion. Retrieved from https://www.cbo.gov/publication/58986
[2] Committee for a Responsible Federal Budget. (2025). Analysis of the One Big Beautiful Bill Act. Retrieved from https://crfb.org/papers/analysis-one-big-beautiful-bill-act
[3] Council of Economic Advisers. (2025). Economic Report of the President. Retrieved from https://www.whitehouse.gov/wp-content/uploads/2025/02/Economic-Report-of-the-President-2025.pdf
[4] This paragraph does not contain new budget-related facts.
[5] Committee for a Responsible Federal Budget. (2025). The State of the Federal Budget 2025. Retrieved from https://crfb.org/thestateofthefederalbudget/2025
The enacted tax reductions under the 2025 Budget Reconciliation Act, commonly known as the One Big Beautiful Bill Act (OBBBA), could potentially impact federal revenues.
The rising federal debt, projected to increase by roughly $4.2 trillion (9% of GDP) by 2034, suggests chronic deficits and continued debt growth over the next decade, with potential signs of this trend beginning or worsening around 2026, due to new fiscal measures.
