This 'economic sugar high' won't last, CRFB warns, touting analysis predicting long-term stagnation and $600 billion of annual borrowing through 2028

"According to the detailed assessment from the nonpartisan budget watchdog, OBBBA will deliver a significant boost to economic output in the near term, with estimates showing growth rates could climb by nearly 1% in 2026, driven by increased demand and one-time incentives for labor and investment. However, the organization stresses this burst of activity is fleeting and warns projected long-term growth will stagnate as additional borrowing burdens the economy."

"The analysis highlights several mechanisms through which OBBBA will stimulate growth in the short run. This includes the government borrowing $600 billion per year from 2026 through 2028, reductions in taxes on work and investment, and temporary expansions of incentives for businesses. These policies are expected to create a surge in demand and temporarily increase labor and capital supply, but the CRFB underscores these one-off effects will fade quickly as the economy adjusts-and particularly so if full employment persists."

"This will be true in 2026 and 2027, the CRFB says, finding near-term economic growth will indeed be boosted, but sustained economic growth will not. CRFB cautions the positive economic effects will be offset over time by rising national debt, which is projected to grow by $4.1 trillion through 2034, crowding out investment and exerting downward pressure on long-term growth."

OBBBA will boost economic output in the near term, with growth rates potentially rising nearly 1% in 2026 due to increased demand and one-time incentives for labor and investment. The law includes $600 billion in annual government borrowing from 2026–2028, tax reductions on work and investment, and temporary business incentives that temporarily expand labor and capital supply. These one-off effects are expected to fade as the economy adjusts, particularly if full employment persists. Rising borrowing is projected to increase national debt by $4.1 trillion through 2034, crowding out investment and exerting downward pressure on long-term growth.

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