IMF staff says U.S. policymakers need fiscal changes worth about 4% of gross domestic product (GDP), measured against its baseline, to put the government debt ratio on a declining path.
In a Feb. 25 concluding statement after its 2026 Article IV mission, staff set a target of a general government primary surplus of about 1% of GDP. The primary balance compares revenue with spending before interest costs. IMF staff said most of the adjustment should come from raising federal revenue and rebalancing entitlement programs, including Social Security and Medicare. It also recommended protections for lower-income households.
The statement described a distributional risk in one modeled policy combination: reductions in Medicaid and food assistance alongside higher tariffs would lower real disposable incomes for the bottom third of households and increase poverty. Those are projected effects of that policy mix, not results already recorded.
The Congressional Budget Office (CBO) projects publicly held federal debt at 101% of GDP in fiscal 2026, rising to 120% in 2036 under its February outlook. The measure excludes federal obligations held in government accounts, so it differs from the IMF’s general government debt measure. The CBO says its 2036 projection would exceed the previous high of 106% recorded in 1946. Its baseline generally assumes tax and spending laws remain unchanged.
Separately, IMF staff projects general government debt near 140% of GDP by 2031 under current policies. The CBO says a rising debt burden can push up borrowing costs, increase interest payments to foreign holders of U.S. debt and narrow lawmakers’ capacity to respond to future needs.
