How do CBO and Treasury estimates for end-of-FY2025 debt compare and why do they differ?
Executive summary
The Congressional Budget Office and the Department of the Treasury offer different pictures of end‑of‑FY2025 debt because they ask different questions, use different data sources and accounting conventions, and operate on different timetables; CBO provides an analytical, projection‑based statement of deficit and debt trends while Treasury reports daily cash flows and the legally binding stock of obligations (including intragovernmental holdings) [1] [2] [3]. Those differences produce modest but meaningful divergences in headline totals and in the drivers cited for rising debt—especially net interest costs and the timing of receipts and reclassifications [1] [4] [2].
1. What each institution reports and why the numbers don’t line up
CBO’s Monthly Budget Review and Budget and Economic Outlook synthesize budget transactions into estimates of the deficit and debt under standardized definitions and projection assumptions; its FY2025 work reports a federal budget deficit of about $1.8 trillion and highlights rising net interest (over $1 trillion) as a major driver of increased outlays [1] [5]. By contrast, Treasury’s account-keeping—reflected in Daily and Monthly Treasury Statements and summarized by congressional offices—records the actual flows and the headline stock of total federal debt as of particular days; public reporting (for example the Joint Economic Committee’s use of Daily Treasury Statements) showed total federal debt rising to about $37.64 trillion at the end of FY2025 [6]. CBO’s monthly figures and narrative sometimes differ from Treasury’s published figures because CBO revises estimates to incorporate later Treasury statements and because the two agencies use different internal treatments of some transactions [4] [1].
2. Methodology: projection versus cash accounting
CBO’s strength is modeling: it projects deficits and debt under current‑law assumptions and macroeconomic forecasts (including assumptions about interest rates and GDP), which produces a picture of debt dynamics more useful for policy analysis [3] [7]. Treasury’s numbers are the mechanical record of what the government actually issued, collected, and paid on particular days; those daily cash flows can show temporary swings—such as big April tax receipts or reallocations of withheld taxes—that CBO later smooths or reclassifies when preparing its estimates [5] [2]. That projection-versus-cash distinction explains many timing and level gaps between CBO summaries and Treasury’s reported outstanding debt [4] [2].
3. Definitions matter: total debt, debt held by the public, and intragovernmental debt
A persistent source of confusion is which “debt” is being cited. CBO reports and analyzes both “debt held by the public” and “total federal debt” (which adds Treasury securities held by trust funds and other government accounts) and ties those concepts to GDP ratios for context [3] [8]. Treasury’s headline daily totals are the legally recognized total debt subject to the statutory limit and include intragovernmental holdings; that is why the reinstated statutory limit was quoted at $36.1 trillion to match the debt outstanding on January 2, 2025 [3]. Comparisons that fail to match definitions will therefore overstate apparent disagreement.
4. Economic assumptions and interest rates amplify divergence over time
CBO’s projections assume a particular path for interest rates and the economy; if market yields remain above those assumptions, interest costs and subsequent debt will be higher than CBO’s baseline—an effect flagged by outside analysts and by CBO itself in long‑term outlooks [9] [7]. The Committee for a Responsible Federal Budget and other groups have produced alternative scenarios showing materially higher debt if yields stay elevated, underscoring that part of the CBO–Treasury gap is a forecasting risk about rates and growth rather than a bookkeeping error [9].
5. Political and timing frictions: debt limit, “extraordinary measures,” and later reclassifications
Practical complications around the debt limit, Treasury’s use of “extraordinary measures,” and reallocation of receipts can shift Treasury’s daily profile and create short‑term departures from CBO’s monthly or quarterly summaries; CBO documents and Treasury reports record such adjustments and note where MBR and Monthly Treasury Statement numbers differ [2] [4]. Political actors also emphasize particular metrics—Treasury’s legally binding stock to argue immediacy, CBO’s projections to argue long‑term risk—so numbers are often framed to support policy positions [6] [9].
Bottom line
CBO and Treasury do not disagree about the broad story: deficits and debt rose substantially in FY2025 and net interest costs are a major and growing driver [1] [5]. The apparent numeric gaps stem from different accounting frames (cash daily totals vs. standardized analytic estimates), differing definitions of “debt,” timing and reclassification of receipts, and forecasting assumptions—especially about interest rates and GDP growth—not from a single clear arithmetic error [4] [3] [9]. Where exact end‑of‑FY2025 dollar comparisons are required, the Daily Treasury Statements provide the official stock and CBO’s Monthly Budget Review provides the reconciled analytic view; users should match definitions and dates when comparing the two [6] [1].