‘The conflict in Iran demonstrates why we need to keep our national debt at a reasonable level’: think tank sees economic emergency around the corner

As U.S. and Israeli forces continue hammering Iranian targets for a second week, a prominent fiscal watchdog is sounding an alarm that has nothing to do with battlefield strategy: America’s soaring national debt may be its most dangerous vulnerability of all.

The Committee for a Responsible Federal Budget (CRFB), a nonpartisan Washington think tank, released a statement on Thursday warning that the ongoing military conflict with Iran has exposed the United States’ precarious fiscal position—and calling on Congress to act with unusual restraint if it moves to pass a war funding package.​

“The conflict in Iran demonstrates why we need to keep our national debt at a reasonable level,” said Maya MacGuineas, president of the CRFB. “Without the fiscal space to respond to emergencies and other urgent needs, we are left vulnerable. How can we prioritize our national security when we’re spending more on interest payments than national defense?”​

The warning comes as reports circulate that the White House may request as much as $50 billion in emergency defense funding to replenish weapons stocks drawn down by the strikes on Iran and as experts such as Penn Wharton’s Kent Smetters estimate a two-month war adding $65 billion onto the national debt. Some in Congress are already eyeing a sprawling package that would bundle in farm aid, disaster relief, and other initiatives—a move MacGuineas bluntly called a “Christmas Tree supplemental.”​

The CRFB’s concerns are grounded in stark fiscal data. The U.S. national debt now stands at roughly 100% of GDP—the highest level since World War II—and the Congressional Budget Office projects it will balloon to 120% of GDP by 2036. Much of that trajectory was locked in last year when President Trump signed the One Big Beautiful Bill Act, which the CBO estimates will add $4.7 trillion to deficits through 2035. The legislation included more than $150 billion in defense-related spending through the reconciliation process—a figure the CRFB says may mean no supplemental war funding is actually necessary.​

The CBO also projects the federal deficit will hit $1.9 trillion in fiscal year 2026, growing to $3.1 trillion by 2036, driven heavily by rising net interest costs. That dynamic—debt service consuming an ever-larger share of the budget—is precisely what MacGuineas warns makes wartime emergencies so financially treacherous.​

The CRFB is not just calling for caution. This week, it released what it’s calling a “Break Glass Plan,” as in, break glass in case of emergency. It’s a pre-built framework for responding to an economic shock without blowing up the country’s fiscal foundation. The four-part plan calls for targeted near-term stimulus, a “Super PAYGO” rule requiring $2 in medium-term savings for every $1 of emergency spending, an automatic deficit reduction mechanism, and a bipartisan fiscal commission to enact longer-term structural reforms. The CRFB claims the plan could reduce deficits to 3% of GDP within four years and save an estimated $10.25 trillion over a decade.​

“We may need such a plan sooner than any of us had hoped,” MacGuineas said.​

The conflict with Iran, now in its second week, has killed more than 1,800 people, including eight U.S. service members, as U.S. Central Command reports striking over 1,700 targets across the country. Iran has retaliated with ballistic missile and drone attacks on U.S. bases and Gulf state infrastructure, while threatening to disrupt global oil flows through the Strait of Hormuz.​​

Against that backdrop, the CRFB’s message to lawmakers is direct: if more war funding is needed, pass only what is strictly necessary, offset the costs over time, and resist the temptation to load up the bill with unrelated spending. The nation’s debt load, the group argues, is no longer just a long-term policy problem—it’s an acute national security risk.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

This story was originally featured on Fortune.com