Interest Costs: Nearly $1.3 Trillion if Rates Stay High
What Fiscal Lab research says about interest on new deficits and rates above the CBO baseline.
Interest is now large enough that a conventional 10-year score can miss a real share of the cost. These pages quantify that gap.
Rates versus the February 2026 baseline
Interest Rates Rising Above CBO Projections compares actual Treasury rates with CBO's February 2026 baseline. The 10-year note was projected at 4.06% in Q1 2026 and 4.09% in Q2. Actual rates were 4.20% and 4.42%. If rates remain elevated through the 10-year window, outlays would increase by nearly $1.3 trillion over FY 2026-2036. In that scenario, net interest in FY 2036 would be about $2.4 trillion, 9.6% ($206 billion) above the baseline. The same page puts debt held by the public above $31.6 trillion as of June 30, 2026.
Interest inside a bill score
Washington Math and the True Cost of Federal Spending walks through a law CBO scored as about $145 billion in direct spending and $4 billion in revenue, a net $141 billion deficit increase. Applying the rate Treasury actually paid adds about $19 billion, for a total near $160 billion, 13% above the score. The page also notes CBO's $1.9 trillion deficit projection for FY 2026, which at a 3.5% average rate would generate about $66.5 billion in extra interest in 2027 alone.
The Fed's balance sheet
How a Large Fed Balance Sheet Complicates Congressional Budget Choices compares a historically normal sheet with a large one. The same swing in short-term rates changes the federal net by about $1 billion a year in the normal case and about $100 billion a year in the large case.