By Ethan Faverino |
Federal interest payments could consume more than half of federal tax revenue by 2036, as rising borrowing costs and mounting national debt threaten the nation’s long-term fiscal stability, according to a new report from Congress’ Joint Economic Committee (JEC).
The report, titled Federal Interest Spending Could Now Exceed Half of Available Tax Receipts in Ten Years, warns that higher interest rates could significantly increase the federal government’s debt-servicing costs, placing additional pressure on the federal budget over the next decade.
According to the JEC, net interest payments could account for 55.4% of federal receipts excluding payroll taxes by 2036 under a higher-interest-rate scenario, compared to 38.1% under the Congressional Budget Office’s (CBO) baseline projections.
The findings come as the national debt has surpassed $40 trillion, with approximately $32.4 trillion held by the public at the end of fiscal year 2026.
“We are rapidly approaching a fiscal reality where more than half of federal receipts outside of payroll taxes could go toward servicing our debt by 2036,” stated JEC Chairman and Arizona Congressman David Schweikert (R-AZ-01).
“Under this higher interest rate scenario, we could spend $23 trillion on interest alone over the next decade. That is spending not on Social Security, not on Medicare, not on national defense, but simply paying for yesterday’s borrowing,” Schweikert added.
According to the JEC, the yield on 10-year Treasury notes increased from approximately 4.2% in February to 5.2% on October 1, 2026. The increase reflects higher federal borrowing costs, raising concerns that interest rates could remain above earlier projections and place additional pressure on the federal budget.
The report draws on a recent CBO analysis examining how higher interest rates could affect federal deficits, debt, and borrowing costs between 2026 and 2036.
Under a scenario in which interest rates remain 1.5 percentage points above the CBO’s February 2026 baseline projections, cumulative federal deficits would increase by approximately $6 trillion over the next decade.
Even under a less severe scenario in which interest rates remain 0.5 percentage points above the CBO’s baseline projections, cumulative federal deficits would increase by approximately $1.9 trillion through 2036, highlighting the federal government’s growing sensitivity to borrowing costs.
Of the projected $6 trillion increase under the higher-rate scenario, approximately $4.9 trillion would result directly from higher interest costs, while an additional $1.1 trillion would come from borrowing needed to finance those increased payments.
The JEC estimates that total net interest spending could reach $23.2 trillion through 2036 under the higher-rate scenario, compared to approximately $17.2 trillion under the CBO’s baseline projections.
The report also highlights the federal government’s exposure to rising borrowing costs as existing debt matures. Approximately $10 trillion in marketable Treasury debt is expected to mature within the next year, potentially requiring refinancing at higher interest rates.
Under the higher-rate scenario, annual federal interest spending would grow by an average of 10.8% over the next decade, significantly exceeding projected annual economic growth of 3.9%.
“When interest costs are growing nearly three times faster than the economy, the math becomes impossible to ignore,” stated Schweikert. “Every dollar we borrow makes us more vulnerable to higher interest rates and leaves fewer resources for everything else. We are approaching a debt spiral that could become mathematically impossible to escape and the window to avert a full-blown fiscal crisis is rapidly closing.”
The CBO further estimates that debt held by the public could reach 133.1% of gross domestic product (GDP) by 2036 under the higher-rate scenario, compared to 120.2% under its baseline projections.
The JEC warned that without significant reductions in federal spending, rising interest obligations could leave Congress facing increasingly difficult decisions involving higher taxes, reduced government spending, or additional borrowing to meet existing financial obligations.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
