Economists Who Weren’t Worried About the Debt Are Now Panicking
What really concerns them isn’t just the $40 trillion.
By Will Gottsegen, The Atlantic
America’s national debt hit $40 trillion last week. That number certainly feels like something worth panicking over—the mind balks at all the zeros. But although the debt has been in the trillions for decades, not everyone has considered it a problem.
One camp of economists has been warning about the perils of high debt for years: Budget hawks predicted that if the country kept spending and didn’t raise taxes enough to keep pace, the resulting fiscal crisis could be devastating. But others—the doves—have brushed it off. Their perspective was that as long as the U.S. GDP was growing faster than the interest rate it was paying on its debt, the Treasury would be able to keep rolling over its bonds without too much of a problem. For much of the 2010s, this was essentially the status quo, and debt panic was muted.
Summary
The piece (Atlantic Daily, Aug. 26, 2026) covers a notable shift among economists on the U.S. national debt, which just crossed $40 trillion. Historically there were two camps: “hawks” who long warned that unchecked debt growth would eventually cause a fiscal crisis, and “doves” who argued that as long as GDP growth outpaced the interest rate on the debt, the government could keep rolling over bonds without major issue. Several prominent doves — including Martha Gimbel (Budget Lab at Yale) and Jared Bernstein (former Biden CEA chair) — have now flipped to hawk, largely because interest rates have climbed sharply (from ~1.5% in 2021 to ~3.4% now) and show no sign of falling back. Rising rates are tied to Fed inflation-fighting, heavy AI-related credit demand, and growing investor wariness about long-term Treasurys.
The article frames the concern as political paralysis: neither party wants to raise taxes or cut spending, the two actual levers for controlling debt, and recent moves (the OBBBA’s cost, immigration-related cuts, a credit downgrade, doubled Treasury bond buybacks) have only added to the deficit trajectory. The piece closes on the “kitchen-table” stakes — rising yields push up mortgage and loan rates for ordinary people — and quotes economists skeptical that the administration’s “grow our way out of it” approach is realistic without a concrete plan.
Fact-check on the CBO claim
The specific claim under examination is this line from the article: “The One Big Beautiful Bill Act will add an estimated $4.7 trillion to the deficit through 2035, and Donald Trump’s efforts to decrease immigration will add another half a trillion to that number over the same period, per the Congressional Budget Office.” That claim checks out, and it traces back to a real, identifiable CBO report — but the single sentence compresses a fair amount of detail, so it’s worth unpacking piece by piece.
Start with the headline number: $4.7 trillion. That’s the amount the Congressional Budget Office now estimates the One Big Beautiful Bill Act will add to the federal deficit between now and 2035. This figure comes from CBO’s February 2026 annual Budget and Economic Outlook, a comprehensive report the agency releases each year projecting where the federal budget, debt, and economy are headed. It’s not a new law or a new estimate of new spending — it’s an updated read on a bill that had already passed roughly a year earlier, recalculated using CBO’s newest economic assumptions.
That $4.7 trillion breaks down into two distinct pieces that come from different sources. The first piece, $3.7 trillion, is what CBO calls the “primary deficit” effect — essentially, the direct, bottom-line impact of the bill’s tax cuts and spending changes, before you account for any borrowing costs. Think of this as the actual hole the bill punches in the budget each year: less tax revenue coming in, combined with whatever spending changes the bill made. The second piece, $0.9 trillion, is the cost of financing that hole. When the government runs a bigger deficit, it has to borrow more money to cover it, and borrowing isn’t free — the Treasury pays interest on every dollar it borrows. Because interest rates are considerably higher today than they were just a few years ago, the interest owed on that extra borrowing adds up to nearly a trillion dollars on its own. Add the two pieces together — $3.7 trillion in direct effects plus $0.9 trillion in interest costs — and you land on the $4.7 trillion total that CBO Director Phillip Swagel cited when the report came out.
If you’ve followed coverage of this bill over time, you may recall smaller numbers being reported — first $2.4 trillion, then $3.4 trillion. Those weren’t wrong at the time; they simply reflected earlier, less complete estimates. The $2.4 trillion figure came from CBO’s initial score of the bill back when it was still working its way through Congress in mid-2025. As the bill was revised in the Senate and eventually signed into law, CBO updated that number to $3.4 trillion to reflect the final version of the legislation. Then, in February 2026, CBO issued its regular annual outlook and recalculated the bill’s effects one more time — this time incorporating newer, higher interest-rate projections and extending the projection window out through 2035 instead of stopping at 2034. That combination of “the same law, but a slightly longer time period and a more pessimistic interest-rate forecast” is what pushed the number up to $4.7 trillion. The bill itself didn’t change.
There’s one more wrinkle worth understanding, because it explains why you might see very different price tags attached to the exact same piece of legislation depending on who’s doing the talking. CBO’s $4.7 trillion figure is calculated using what’s called a “current law” baseline, meaning the original 2017 tax cuts were written with a built-in expiration date, so current law assumes they go away on schedule rather than continuing forever. The One Big Beautiful Bill Act — the actual law Congress passed and President Trump signed in July 2025, has now permanently locked in the lower individual tax rates that were otherwise set to expire at the end of 2025. Because that expiration was written into current law, CBO treats the bill’s extension of those rates as a cost: it counts all the tax revenue the government would have collected once rates rose back up starting in 2026, but now won’t collect because the law made the lower rates permanent instead. Using this current-law approach, Congress’s official revenue scorekeeper (the Joint Committee on Taxation, whose estimates CBO relies on) calculated that just the individual tax cut extension — on its own, before factoring in the bill’s other provisions — will cost about $4.2 trillion in lost revenue over ten years.
That $4.2 trillion figure is larger than the $3.7 trillion primary deficit number mentioned earlier because the $4.2 trillion figure only reflects the individual tax cut extension in isolation — just that one piece of the bill, on its own. The One Big Beautiful Bill Act also included spending reductions elsewhere (mainly to Medicaid and other programs), and those spending cuts partially offset the cost of the tax cuts. Once you combine the $4.2 trillion in lost tax revenue with the savings from those spending cuts, the bill’s net primary effect comes down to the smaller $3.7 trillion figure — before interest costs are added back in to reach the full $4.7 trillion total.
Republicans in Congress, however, directed that same scorekeeper to also calculate the bill’s cost using a different yardstick, called a “current policy” baseline. Under this approach, instead of assuming the tax cuts were scheduled to expire, you simply assume the tax rates in effect right now continue indefinitely, as if the 2025 expiration date in the original law never existed. If your starting assumption is that low rates were already permanent, then a bill that makes them permanent isn’t actually changing anything — so it shows up as costing almost nothing. Using this current-policy approach, the same set of tax cuts that cost $4.2 trillion under current law was scored at just $442 billion — less than one-tenth as much. Critics call this a bookkeeping maneuver that lets Congress avoid facing the full sticker price of a permanent tax cut; defenders counter that it’s a reasonable way to treat a long-standing policy rather than scoring it as if it were brand-new spending.
Either way, current law remains the standard CBO and JCT are legally required to use in their official scores, which is why the $4.7 trillion figure — not the current-policy alternative — is the one that shows up in CBO’s formal reporting. That distinction isn’t just academic. Under current law, absent this bill, individual tax rates were scheduled to rise starting in 2026, and the Treasury’s official projections assumed it would begin collecting that higher revenue on that schedule. Because the bill locked in the lower rates instead, that revenue increase never happens — the government simply takes in less money than its own prior projections assumed. The $4.7 trillion figure is CBO’s way of capturing that real, measurable gap between expected and actual revenue, rather than a hypothetical based on an alternate version of the law that was never actually on the books. It’s also the figure independently corroborated by nonpartisan analysts outside CBO, using the same February 2026 update.
The immigration half-trillion
The article’s claim also includes a second, smaller figure: that Trump’s immigration enforcement efforts will add roughly half a trillion dollars to the deficit over the same period. This comes from the same February 2026 CBO outlook and rests on a different mechanism entirely — it isn’t about enforcement being expensive to carry out, it’s about what a smaller population does to future tax revenue. CBO’s enforcement actions (funded in part by the OBBBA itself, which included about $150 billion for border wall construction, detention capacity, and additional personnel) are projected to result in hundreds of thousands of removals and reduced net immigration over the next decade. Combined with the country’s already-low birth rate, CBO now projects the U.S. population will be roughly 5.3 million smaller by 2035 than it had projected before these policies. A smaller population — especially fewer working-age adults — means fewer people earning wages, paying income and payroll taxes, and contributing to economic growth. CBO estimates that this shrinking of the future tax base, not the cost of enforcement operations themselves, is what adds roughly $500 billion to the 10-year deficit. In other words: this isn’t a line-item expense so much as lost future revenue from a smaller working population.
Why it matters
Put together, the two figures in the article’s claim — $4.7 trillion from the tax bill and roughly $500 billion from reduced immigration — come from the same underlying source and reflect the same basic pattern: policy choices that reduce the size of the future tax base, whether by cutting the rates people pay or by shrinking the number of people paying them, show up in CBO’s models as added deficit over time. Both numbers are legitimate, both trace back to CBO’s official February 2026 outlook, and both are stated accurately in the article. The one caveat worth carrying forward is that “$4.7 trillion” isn’t a fixed, universally agreed-upon price tag — it’s the current-law estimate, which is the methodologically rigorous and legally mandated standard, but not the only way the bill’s backers have chosen to present its cost.
