CBO Projects US Debt at 120% of GDP by 2036 and 175% by 2056 as Interest Costs Overtake Defence

Between October 2025 and May 2026, the federal government spent $722.7 billion on net interest and $630.9 billion on national defence, according to Treasury’s monthly statements. Interest beat defence by $92 billion in eight months. In fiscal 2025 the two were close: $970 billion on interest, $917 billion on defence.

That crossover is the most concrete sign of what the Congressional Budget Office’s projections have been saying for years. The debt is now large enough that paying for it competes with everything else the government does.

Where the debt is going

CBO’s February 2026 outlook puts the fiscal 2026 deficit at $1.9 trillion, 5.8% of GDP. Debt held by the public is 101% of GDP this year and reaches 120% by 2036. It passes the post-war record of 106%, set in 1946, by 2030. Deficits over the next ten years add up to $24.4 trillion and average 6.1% of GDP. By 2036 the annual deficit is $3.1 trillion.

The long-term numbers, which CBO published in February as data without a full report, go further. Debt reaches 129% of GDP in 2040 and 175% in 2056, about $168 trillion. In the same year the deficit is 9.1% of GDP.

Interest becomes the story

Net interest is about $1 trillion in fiscal 2026, 3.3% of GDP. CBO projects $2.1 trillion, 4.6% of GDP, by 2036 and 6.9% of GDP by 2056. In the long-term data, interest passes Medicare in 2028 and Social Security in 2047, and absorbs 37% of federal revenue by 2056. Cumulative interest over thirty years is about $99 trillion.

Interest rates make the projections fragile. In September CBO published scenarios showing how deficits and debt change if rates are higher or lower than assumed. Since then the Federal Reserve has raised its policy rate for the first time since 2023, to 3.75–4.00%.

The trust funds

The other clock is the trust funds. The 2026 Social Security and Medicare trustees’ reports, released in June, put the depletion of the Social Security retirement fund in late 2032, after which about 78% of scheduled benefits could be paid. The combined retirement and disability funds run out in 2034. Medicare’s hospital insurance fund runs out in 2033, with 89% of benefits payable. CBO’s own dates differ on Medicare, putting hospital insurance depletion in 2040, but agree on Social Security in fiscal 2032.

When a trust fund runs out, the law cuts benefits automatically to match incoming revenue, unless Congress acts. No plan to close the gap has passed either chamber.

How the US compares

Other large economies carry high debt too. Japan’s is far higher as a share of GDP. Italy’s is above 130%. What sets the US apart is the trend: it runs deficits of 6% of GDP or more during an economic expansion, which few rich countries do, and its interest bill is rising faster than its economy.

There’s no single fiscal rule in Washington to force a correction. The debt limit, now $41.1 trillion, caps borrowing but not the spending and tax laws that cause it. Each extension buys time. The CBO numbers show how much time costs.