The White House in 2036 will face a daunting fiscal reality: finding more than $2 trillion a year just to cover interest on the national debt—about 5% of the entire U.S. economy.
The latest projections from the Congressional Budget Office (CBO) show the federal government continuing to run large and rising deficits over the next decade. In 2026, the deficit is expected to be roughly $1.8 trillion, or 5.8% of GDP. By 2036, that gap is projected to widen to $3.1 trillion, or around 7% of the economy.
Persistent borrowing—regardless of which party holds the White House—also means rising interest costs to service the debt. The national debt currently stands at $38.59 trillion, and Treasury data show the government has already paid $427 billion in interest this fiscal year.
The Treasury has grown accustomed to paying more than $1 trillion a year in interest in recent years, but the CBO projects that annual interest costs will climb to $2.14 trillion by 2036. That would be nearly double the annual defense budget. In a December analysis, the Committee for a Responsible Federal Budget said $1 trillion per year in interest payments is likely to become the new normal.
On the revenue side, the CBO expects steady growth. The government is projected to collect about $5.6 trillion in 2026, $5.9 trillion in 2027, and more than $8.3 trillion by 2036. The projections also factor in President Trump’s tariff regime, which is expected to reduce deficits by roughly $3 trillion, though the CBO notes the tariffs are inflationary—an assessment the White House disputes.
In practice, tariff revenue may shrink over time. Treasury Secretary Scott Bessent has described it as a “shrinking ice cube,” as tariff reductions tied to new trade deals had already reduced the projected deficit impact by $800 billion as of November, according to the CBO. Since then, Trump has cut tariff rates for India, outlining a deal shortly after India and the European Union announced a long-anticipated trade pact.
The biggest sources of revenue over the next decade are expected to remain individual income taxes and payroll taxes, which together are projected to bring in $4.2 trillion and $2.66 trillion by 2036.
But spending will rise as well. By 2036, mandatory programs such as Social Security and major health-care programs including Medicare and Medicaid are projected to exceed $7 trillion annually, consuming the bulk of federal resources before discretionary spending is even considered.
A major driver is demographic change. The Population Reference Bureau projects that the number of Americans age 65 or older will increase from 58 million in the early 2020s to 82 million by 2050—about a 42% jump. As a result, Social Security spending is projected to rise from $1.6 trillion in 2026 to $2.7 trillion in 2036, while major health-care programs grow from $1.9 trillion to $3.1 trillion. Combined increases in health-care spending and net interest costs alone would amount to a substantial share of the economy within the next decade.
Put simply, the costs of supporting an aging population are rising fast—and today’s obligations are increasingly being financed by future taxpayers.
Increasing the burden on Americans
Some investors and analysts have warned that foreign holders of U.S. debt could try to exert leverage over Washington, or that markets could react sharply to policy missteps. Many economists, however, expect any adjustment to be less dramatic—though still painful.
One possibility is “financial repression,” in which regulations require institutions to hold more government debt, supporting demand and prices. Another is higher inflation, which would reduce the real value of debt over time but erode purchasing power for consumers. Quantitative easing is also an option, as expanding the money supply can help keep borrowing costs down, though it may also stoke inflation.
The most likely outcome—unless the U.S. grows its way out of an unhealthy debt-to-GDP trajectory—is that American households eventually bear more of the cost of past borrowing. Nonpartisan groups such as the Committee for a Responsible Federal Budget and the Peter G. Peterson Foundation are urging lawmakers to adopt fiscal guardrails to prevent deficits from consistently outpacing revenue.
“CBO’s latest budget projection is an urgent warning to our leaders about America’s costly fiscal path,” Peterson Foundation CEO Michael Peterson said in a statement. “Improving affordability for American families is a top priority for the nation. Borrowing trillion after trillion takes us in the wrong direction, leading to higher interest costs and higher prices for everyday needs.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, echoed that view: “Unless lawmakers want record-high debts and deficits to be our norm, both sides of the aisle must come together to address our unsustainable borrowing. The longer lawmakers wait, the higher the price for Americans.”
Peterson also argued that in an election year, voters increasingly see how rising debt can affect their own economic lives—and that financial markets are paying attention. “Stabilizing our debt is an essential part of improving affordability,” he said, “and must be a core component of the 2026 campaign conversation.”
