March 11, 2026
Chairman Ron Johnson
Ranking Member Tina Smith
Subcommittee on Fiscal Responsibility and Economic Growth
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, DC 20510-6200
Chairman Johnson, Ranking Member Smith, and Members of the Committee,
We are pleased that you are holding this important hearing today regarding our nation’s fiscal outlook over the next ten years. We hope that the testimony and resulting discussion will help lead to improvements in the fiscal health of our federal government, as our nation’s finances do not paint an optimistic picture. According to analysis by our own fiscal experts, as well as many others across the political spectrum, the outlook is “déjà vu all over again.” The U.S. government fiscal outlook is bad, and it’s getting worse.
CBO’s Budget and Economic Outlooks have generally told the same story over the last few years: rising spending, large and persistent deficits, and a national debt rising to levels never before seen. However, this most recent outlook showed a heightened pace in spending. According to the Center for a Responsible Federal Budget (CRFB), our government borrowed $1 trillion in the first five months of this fiscal year (just since September 2025), including over $300 billion in February alone.
The successful passage of the historic Working Families Tax Cuts last year will help strengthen economic growth by creating jobs, spurring productivity, and boosting Americans’ take-home pay. However, simple math demonstrates that we cannot simply grow our way out of our nation’s budget crisis. Significant reductions to federal spending are also needed to move the federal budget toward balance. This year’s CBO outlook tells a grim fiscal story for the federal budget. The federal deficit is projected to increase to almost double the 50-year historic average by 2036. In ten years, the federal debt will rise to 120% of GDP, well over the previous record of 106% after World War II. If current fiscal trends prevail, debt levels may hit 175% of GDP twenty years later. CBO also projects that the Social Security trust fund balance will empty in 2032, leading to a 23% benefit cut for beneficiaries without a fix. Even now, the fund already faces a $245 billion per year shortfall, placing further strain on the nation’s fiscal outlook.
While reducing government spending may seem like a relatively easy task to the casual observer, even a quick look at the makeup of federal spending reveals the heavy lift ahead for lawmakers to bring our nation to fiscal balance. Less popular programs like foreign aid are barely a rounding error in the federal budget. According to CBO data assembled by the Bipartisan Policy Center, federal spending will rise by $4.4 trillion by 2036, to a total of $11.4 trillion. The largest components of this increase are line items that are difficult to trim, popular with voters, or both:
Major health programs (including Medicare, Medicaid, and ACA subsidies) – 29%
Social Security – 27%
Net interest on the debt (the fastest growing component) – 27%
Other mandatory programs – 9%
According to this data, only 8% of the projected increase in the federal deficit comes from discretionary spending.
Fortunately, there are several fiscal reforms that could help Congress eventually reach fiscal balance. NTU has supported the enactment of a constitutional amendment to require a balanced federal budget since 1975, including H.J. Res 139 in this Congress. This measure has stronger protections against deficit spending and tax increases than previous versions, and uses a three-year revenue average to better define budget balance.
We also support the creation of a fiscal commission to help Congress rein in the tide of red ink, as well as a series of smaller fixes to help restore fiscal discipline, including restoring regular order in the budget process, requiring more consistent dynamic analysis full cost disclosure for major legislation, and incorporating debt service costs in official estimates.
One way to get the ball rolling is by moving toward a 3% deficit-to-GDP target. Recent legislation introduced in Congress establishes this goal, providing lawmakers with a clear, ambitious, and achievable benchmark to work from. Unlike arbitrary dollar caps that quickly become outdated, a GDP-based benchmark adjusts for economic growth and recognizes that fiscal sustainability requires both spending restraint and a growing economy.
As we all know, the risks of inaction are very high. Rising federal debt increases pressure on long-term interest rates, with CBO estimating 10-year Treasury yields will be almost double the recent historic average by 2036. Slowing population growth and a graying America will also put increased pressure on government spending. Government borrowing increases inflationary pressure on the economy, as this spending competes with the spending of individual taxpayers, bidding up the prices of goods and services. This competition is effectively a regressive tax, increasing economic inequality and insecurity, as well as risking future bouts of hyperinflation.
Rising government borrowing crowds out private investment, as government debt competes for investors against the private sector. Lower private investment reduces future productivity gains, eventually lowering economic output and individual earnings. This can create economic stagnation and heightens the risk of fiscal shocks.
Over time, uncontrolled federal debt levels can become a true threat to national security, as ballooning interest payments divert spending from core federal functions like national defense. If the nation ever faces a future wartime scenario that requires heavy borrowing to finance operations, like World War II, huge peacetime deficits will reduce our ability to negotiate wartime financing.
It is important for lawmakers to take action before it is too late. Unsustainable and uncontrolled federal spending risks triggering a fiscal time bomb that could detonate without warning, potentially destabilizing the American economy. Credit agencies are already lowering the rating of U.S. sovereign debt, noting that our political dysfunction increases the likelihood of future unpaid debts. As a result, bond yields have increased, increasing the possibility of the federal government entering a “debt doom loop.” At some point soon, investors may determine that federal debt is less reliable, and expect much higher yields to continue holding it. This yield surge can be both sudden and large, as well as hard to fix.
We urge the Committee, and Congress as whole, to quickly pursue practical solutions to our government spending crisis. The choices will not be easy and will increase in severity over time if Congress does not choose to act soon.
Thank you for holding this important hearing to assess our nation’s fiscal outlook, and for exploring possible solutions to our ballooning federal deficits. NTU and NTU Foundation stand ready to help Congress reach for responsible and realistic policy options that can help the federal government pay its debts as well as aid the average taxpayer. After all, with all the smart people in Congress, taxpayers should expect our government to balance its checkbook as well as they do.
Sincerely,
David Timmons
Senior Policy Manager