The Congressional Budget Office (CBO) recently released its latest budget baseline, providing fiscal and economic policy projections from fiscal years (FY) 2026 through 2036. Despite reforms in the One Big Beautiful Bill, federal spending driven by some of the largest programs is projected to keep rising.
Spending Soars Since the Pandemic
Total spending since the COVID-19 pandemic is growing at an unsustainable rate. Total outlays are projected to jump to $7.4 trillion in FY 2026, roughly 70 percent higher than 2019 levels. By FY 2030, spending will be double levels before the pandemic. In FY 2036, outlays will nearly triple the pre-pandemic spending levels.
Entitlements Drive Spending Increases
Programs such as Social Security, major health entitlements, and the rapidly rising interest payments on the national debt all drive this projected spending increase.
Spending has dramatically increased relative to pre-pandemic levels on major entitlement programs, alongside spending on national defense and payments on the national debt.
Interest payments on the national debt will grow the most relative to pre-pandemic levels over the next decade. CBO projects net interest outlays will more than double, to roughly $2.1 trillion, by the end of the 10-year window. This outpaces every major category of spending except Social Security. By FY 2036, interest costs will roughly equal all discretionary spending for that fiscal year.
Major entitlement programs will continue expanding as well. Social Security spending is projected to double FY 2019 levels by 2030 and rise to 165 percent above pre-pandemic spending levels by FY 2036. Medicare grows even faster, increasing 206 percent in 2036 relative to FY 2019 levels. Medicaid will climb 140 percent over the same period.
Defense spending also increases relative to pre-pandemic levels, but at a slower pace than entitlements and debt service. By FY 2036, defense spending will increase 63% relative to FY 2019 levels.
