Brief
CBO chief says 5‑6% real growth needed to stabilize U.S. debt
Swagel warned that even AI‑driven growth would fall short of the pace required to halt the debt trajectory.
By Felo News Desk · Published
Congressional Budget Office Director Phillip Swagel told a Minneapolis Federal Reserve conference on Thursday that only a sustained 5‑6% real GDP growth rate could keep the United States debt‑to‑GDP ratio from climbing sharply, a pace far above current forecasts.
What happened
Swagel said the nation’s gross debt stands at $40 trillion, with publicly held debt already equal to 100% of GDP. He warned that, at current policy settings, the debt‑to‑GDP ratio could reach 120% by 2036. When asked how fast growth would need to be to stabilise the ratio, Swagel offered back‑of‑the‑envelope figures: assuming 4%‑5% interest rates, nominal GDP would have to grow 7%‑8% and real GDP 5%‑6%.
What the reports add
The Fortune article notes that Swagel highlighted a “turbocharger” effect – faster growth raises tax revenues but also lifts wages, which in turn increase Social Security outlays, and pushes interest rates higher, adding to debt‑service costs. He also said the CBO will incorporate AI‑related productivity gains into its next set of forecasts due early next year.
What was said
“So growth will help, but it’s probably not plausible that growth alone will stabilize our fiscal trajectory,” Swagel told Fortune.
“So then we’re left with changes in revenues and changes in spending, and those are inherently political choices,” he added.
Minneapolis Fed President Neel Kashkari asked whether AI could super‑charge growth; Swagel replied that the CBO has detected an increase in total factor productivity and expects future growth to be stronger, though still insufficient to close the fiscal gap.
How it came about
Swagel’s comments follow a series of recent Felo News pieces on the debt challenge. On October 3, Felo reported Scope Ratings’ warning that rising interest costs could push the debt‑to‑GDP ratio toward 160% by 2036. Earlier, on September 27, Felo noted that U.S. nominal GDP growth had topped 6% while borrowing costs rose, and on September 19 highlighted 10‑year Treasury yields breaching 5% for the first time since 2007. Together, these pieces illustrate the widening gap between growth and debt‑service pressures that Swagel says only a very high growth rate could narrow.
Key facts
- U.S. gross debt is $40 trillion, with publicly held debt equal to 100% of GDP. (fortune.com)
- CBO projects the debt‑to‑GDP ratio could reach 120% by 2036. (fortune.com)
- Swagel estimates real GDP growth of 5%‑6% (nominal 7%‑8%) would be needed to stabilise the ratio. (fortune.com)
- AI‑driven productivity gains will be incorporated into the CBO’s next forecast early next year. (fortune.com)
Timeline
- 2026-09-19 — 10‑year Treasury yield tops 5% for first time since 2007
- 2026-09-27 — U.S. nominal GDP growth exceeds 6% while debt rises
- 2026-10-03 — Scope Ratings warns debt could hit 160% of GDP by 2036
Sources
- [1] fortune.com — originally reported as “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”
