The Congressional Budget Office is projecting that the U.S. government will pay $20.1 trillion in interest on its debt over the next decade, a figure that underscores how much of the federal budget is now consumed simply servicing money already borrowed. Interest payments are expected to total $1.2 trillion in 2026 alone and climb to nearly $2.5 trillion a year, roughly $200 billion a month, by 2036. That trajectory comes on top of a national debt burden already near $40 trillion.
The deficit picture isn't improving either: the CBO projects a $2 trillion shortfall for fiscal year 2026, widening to more than $3 trillion annually by 2036, for a cumulative gap of $25.6 trillion over the decade. CBO Director Phil Swagel described the structural deficit, currently running around 6% of GDP, as "unprecedented," and said closing it will take more than economic expansion alone. "Stronger growth will help, but it's not enough," Swagel said. "We need more than just growth, we need policy actions."
Interest payments outpacing the defense budget
One of the starkest comparisons in the CBO's outlook is between interest costs and military spending. Defense spending is projected to reach roughly $1.1 trillion by 2036, meaning the government's annual interest bill would run close to double what it spends on defense. Social benefits spending, meanwhile, is projected to climb from $3.7 trillion in 2026 to $6.1 trillion by 2036, driven in large part by an aging population moving onto Social Security and Medicare.
Entitlement trust funds running low on time
That demographic pressure is colliding with a hard deadline: the CBO's projections point to the Social Security trust fund being depleted in a little over seven years, with Medicare's trust fund projected to run out roughly six and a half years from now. Treasury Secretary Scott Bessent has pointed to stronger economic growth as part of the answer to avoiding a fiscal crisis, but the CBO's own numbers suggest growth alone won't close a deficit running at 6% to 7% of GDP when proposals on the table aim for something closer to 3%. The gap between those two figures is effectively the scale of the policy choices, on spending, taxes, or both, that Washington has yet to make.
