CBO Director, whose office is known for gloomy national debt projections, confident a crisis can be entirely avoided

(SeaPRwire) –   Dr. Phillip Swagel, by his nature and his assessment of the U.S. economy, is an optimist.

This might seem contrary to expectations, given that Swagel leads the Congressional Budget Office (CBO), the nonpartisan agency responsible for providing Congress with independent budgetary and economic analysis.

A frequent, and perhaps unavoidable, focus of the CBO’s work is the national debt and the interest the U.S. Treasury incurs to manage it. The figures are substantial: Public debt exceeds $39 trillion, with annual interest payments on this borrowing surpassing $1 trillion. The CBO’s most recent budget update indicates that the government paid nearly $530 billion in interest between October 2025 and March 2026, according to preliminary estimates. This translates to over $88 billion in monthly interest or more than $22 billion weekly.

Policymakers, think tanks, and lobbyists commonly cite the CBO’s data as a stark warning that the U.S. must adopt a more sustainable fiscal strategy to avoid severe economic difficulties.

However, Swagel does not believe the U.S. is headed for a self-inflicted crisis. His reasoning is straightforward: He experienced the 2008 financial crisis while at the Treasury and joined the CBO shortly before the COVID-19 pandemic. He has witnessed the U.S. economy recover from economic downturns, often against considerable odds.

This is not to say Swagel is not a strong proponent of guiding the U.S. toward a more sustainable fiscal path; rather, he has confidence that those in power will address the issue when necessary.

Why the optimism?

Prominent figures, including JPMorgan Chase CEO Jamie Dimon, Federal Reserve Chairman Jerome Powell, and Bridgewater Associates founder Ray Dalio, have expressed concerns about the national debt. Tesla CEO Elon Musk has also voiced worries about federal spending and has supported a proposal by Berkshire Hathaway founder Warren Buffett that would disqualify members of Congress from reelection if deficits exceed 3% of GDP.

Conversely, some optimistic economists argue that the sheer volume of debt is not inherently problematic. They point to the stability of the bond market, indicating a consistent demand from buyers. Furthermore, the U.S. central bank itself purchases significant portions of this debt, which, in simple terms, allows the economy to effectively create its own money. However, this perspective has weaknesses, notably the suggestion by Federal Reserve nominee Kevin Warsh that he intends to reduce the Fed’s balance sheet, potentially diminishing its capacity to finance government borrowing.

Swagel’s positive outlook is not based on the assumption that a crisis won’t occur simply because it hasn’t yet. “My optimism is rooted in my experience,” Swagel stated in an exclusive interview in Washington D.C. “First, being at Treasury during the financial crisis and witnessing very difficult times, and then seeing the country come together with an effective response—not to say it was perfect or without controversy, but it was effective.”

“Secondly, policymakers are intelligent and thoughtful. My interactions with members of Congress make me optimistic. I understand the public discourse often focuses on disagreements, but the policymakers who are seriously considering these issues are thoughtful and capable. While they may not always be effective at passing legislation, that is a characteristic of our political system, which was designed to make legislative passage challenging.”

Decisions on the horizon

Swagel anticipates that Congress will eventually be compelled to act, likely within the next six years, he told . This is partly because, according to the Committee for a Responsible Federal Budget (CRFB), both Social Security and Medicare are projected to become insolvent within that timeframe.

“Making progress on the fiscal trajectory would benefit the U.S. economy,” Swagel remarked. “Credible actions would lead to lower interest rates, easing subsequent adjustments; there is a reward for responsible action. It’s a positive development, and we cannot sustain a purely critical narrative. My sense is that members of Congress grasp the fiscal situation. While not every single one may have analyzed our one-page summary of numbers down to the third decimal point, they understand that action is required.”

“It doesn’t need to happen immediately, but at some point reasonably soon.”

Swagel believes that bond investors have not raised risk premiums not due to a lack of concern about a fiscal crisis, but because they have already factored in preventative measures by Congress—which, in his view, represents “a vote of confidence that my optimism is not misplaced.”

“As a nation, we confront these challenges. It’s not happening now, and I’m uncertain if it will occur this year, next year, or even in the next two years. But we will face it, and the market, in a sense, anticipates this, because otherwise, interest rates would be higher,” he explained.

The Cheesecake Factory

The CBO’s role, to some extent, is to present policymakers with their available options should they decide to address federal deficits. Swagel likens this to a menu at the Cheesecake Factory: extensive, offering a variety of modifications and choices, and presented without judgment.

“Right now, it’s perhaps a ‘pick three,’ and you’re looking at a six or seven-course menu,” joked Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center, in an interview with . “The longer you delay, the more you’ll have to add to your tab, and those options become more expensive.”

Indeed, economists and analysts are not primarily concerned with the absolute level of government debt, but rather the debt-to-GDP ratio. Depending on the source, this ratio currently stands at approximately 122% of GDP. This metric reflects an economy’s spending relative to its growth, highlighting the risk associated with lending to a nation that is not expanding sufficiently to manage its expenditures. To improve this ratio, an economy could either reduce spending or increase growth—the latter being the significantly less arduous path.

Michael Peterson, CEO of the fiscal think tank the Peter G. Peterson Foundation, told in an exclusive interview that the growth option is becoming less viable: “I believe government action is necessary because we have waited too long. We have accumulated trillions in debt, and the current deficit is substantial at 6%, meaning the level of growth required is beyond what is feasible.

“Growth must be part of the solution, but it’s a bit of a vicious cycle. The longer we postpone action, the more debt we accumulate, and the slower growth will become. Conversely, if we gain control of the situation, I believe there will be greater optimism, interest rates will decrease, and growth will accelerate. It’s a virtuous or vicious cycle, depending on our policy response.”