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U.S. Federal Deficit Projections Exceed Expectations Amid Policy Shifts and Tariff Revenues

Rising Deficits and Revised Forecasts

The Committee for a Responsible Federal Budget (CRFB) has revised its outlook, projecting that U.S. federal deficits will be nearly $1 trillion higher over the next decade than previously estimated by the Congressional Budget Office (CBO) in January. The new forecast anticipates a cumulative shortfall of $22.7 trillion from fiscal 2026 to 2035, compared to the previous projection of $21.8 trillion. These estimates reflect recent tax, spending legislation and the impact of tariffs implemented during the Trump administration.

Legislative Changes and Tariff Implications

The revised numbers incorporate the fiscal effects of the One Big Beautiful Bill Act alongside existing tariff policies. Although both the CRFB and the CBO exclude dynamic economic growth effects from their forecasts—a methodology that has drawn criticism from the current administration—the CRFB estimates that the tax cuts and new spending measures will add significantly to deficits. According to the CRFB, the associated cost, including interest, could surge by $4.6 trillion through 2035, compared to the CBO’s $4.1 trillion projection through 2034. However, in a partial offset, additional import duty revenues generated by the tariffs are expected to contribute $3.4 trillion over the same period.

Impact on Future Economic Metrics

In its projections, the CRFB also cited new discounting measures such as restrictions on health insurance subsidy eligibility and reductions in foreign aid and related expenditures, which together potentially save an estimated $200 billion over a decade. Despite these adjustments, rising net interest payments on the national debt are cause for concern. CRFB forecasts suggest that these payments will escalate from nearly $1 trillion (3.2% of GDP) in 2025 to $1.8 trillion (4.1% of GDP) by 2035, culminating in a total of $14 trillion over the decade.

Alternative Fiscal Scenarios and Policy Risks

Under an alternative scenario considered by the CRFB, the fiscal outlook deteriorates further, with deficits potentially reaching nearly $7 trillion above the CBO baseline. Central to this scenario is the assumption that a portion of the tariffs, amounting to $2.4 trillion in revenue over ten years, could be negated should the Court of International Trade uphold rulings against many of the new tariffs. Additionally, the extended application of temporary tax measures—including breaks on overtime, tips, and Social Security income—could add an extra $1.7 trillion in deficits. The CRFB warns that if 10-year U.S. Treasury yields remain at current levels, as opposed to declining to 3.8% as forecast by the CBO, interest costs could further increase by about $1.6 trillion through 2035.

Long-Term Debt-to-GDP Trajectories

The revised forecasts suggest a steadily worsening debt-to-GDP ratio. According to the CRFB, the ratio could rise from 118% in the CBO’s January baseline to 120% under their projected scenario, or escalate as high as 134% in the more adverse alternative scenario. These figures underscore the challenges policymakers will face in managing both current fiscal commitments and burgeoning debt in a dynamic global economic environment.

Strained Household Finances: Eurostat Data Reveals Persistent Payment Delays Across Europe and in Cyprus

Improved Financial Resilience Amid Ongoing Strains

Over the past decade, Cypriot households have significantly increased their ability to manage debts—not only bank loans but also rent and utility bills. However, recent Eurostat data indicates that Cyprus continues to lag behind the European average when it comes to covering financial obligations on time.

Household Coping Strategies and the Limits of Payment Flexibility

While many families are managing their fixed expenses with relative ease, one in three Cypriots struggles to cover unexpected costs. This delicate balancing act highlights how routine payments such as mortgage installments, rent, and utility bills are met, but precariously so, with little room for unplanned financial shocks.

Breaking Down Payment Delays Across the European Union

Eurostat reports that nearly 9.2% of the EU population experienced delays with their housing loans, rent, utility bills, or installment payments in 2024. The situation is more acute among vulnerable groups: 17.2% of individuals in single-parent households with dependent children and 16.6% in households with two adults managing three or more dependents faced payment delays. In every EU nation, single-parent households exhibited higher delay rates compared to the overall population.

Cyprus in the Crosshairs: High Rates of Financial Delays

Although Cyprus recorded a notable 19.1 percentage point improvement from 2015 to 2024 in delays related to mortgages, rent, and utility bills, the island nation still ranks among the top five countries with the highest delay rates. As of 2024, 12.5% of the Cypriot population had outstanding housing loans or rent and overdue utility bills. In contrast, Greece tops the list with 42.8%, followed by Bulgaria (18.7%), Romania (15.3%), Spain (14.2%), and other EU members. Notably, 19 out of 27 EU countries reported delay rates below 10%, with Czech Republic (3.4%) and Netherlands (3.9%) leading the pack.

Selective Improvements and Emerging Concerns

Between 2015 and 2024, the overall EU population saw a 2.6 percentage point decline in payment delays. Despite this, certain countries experienced increases: Luxembourg (+3.3 percentage points), Spain (+2.5 percentage points), and Germany (+2.0 percentage points) saw a rise in payment delays, reflecting underlying economic pressures that continue to challenge financial stability.

Economic Insecurity and the Unprepared for Emergencies

Another critical indicator explored by Eurostat is the prevalence of economic insecurity—the proportion of the population unable to handle unexpected financial expenses. In 2024, 30% of the EU population reported being unable to cover unforeseen costs, a modest improvement of 1.2 percentage points from 2023 and a significant 7.4 percentage point drop compared to a decade ago. In Cyprus, while 34.8% still report difficulty handling emergencies, this marks a drastic improvement from 2015, when the figure stood at 60.5%.

A Broader EU Perspective

Importantly, no EU country in 2024 had more than half of its population facing economic insecurity—a notable improvement from 2015, when over 50% of the population in nine countries reported such challenges. These figures underscore both progress and persistent vulnerabilities within European households, urging policymakers to consider targeted measures for enhancing financial resilience.

For further insights and detailed analysis, refer to the original reports on Philenews and Housing Loans.

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