With U.S. debt already projected to exceed its 1946 record, the Congressional Budget Office (CBO) estimates that sustained higher interest rates would add $6 trillion to federal deficits through 2036.
The estimate assumes rates remain 1.5 percentage points above the agency’s February 2026 baseline from 2026 through 2036. It measures the budget effect of that extended increase in borrowing costs.
CBO attributes $4.9 trillion of the added deficits to interest on debt included in its baseline. That includes obligations already outstanding and borrowing projected during the period. Another $1.1 trillion would come from interest on the additional borrowing needed to finance the larger deficits.
The agency also examined rates 0.5 percentage point above baseline. That smaller increase would add about $1.9 trillion to cumulative deficits from 2026 through 2036. CBO assigns $1.6 trillion of that amount to interest on baseline debt and $297 billion to interest on borrowing prompted by the added deficits.
For 10-year Treasury notes, CBO’s baseline rate averages 4.3% from 2026 through 2036. The average rises to 4.8% in the smaller rate scenario and 5.8% in the larger one. Both comparisons use the same February 2026 baseline.
The costs accumulate as the Treasury replaces maturing securities at higher rates. Wider deficits then require further borrowing, adding to future interest payments. CBO holds other economic factors unchanged in its calculations, so the figures do not capture how the economy might respond to higher rates.
CBO’s baseline puts debt held by the public at 101% of gross domestic product in fiscal 2026 and 120% in 2036, as outlined in earlier coverage of U.S. debt projections. The 2036 projection exceeds the previous peak of 106%, reached in 1946.
The scenarios assume rates stay elevated for years; they do not measure the fiscal effect of a single Federal Reserve decision. The Fed’s next policy meeting is scheduled for Oct. 27-28.
