The federal government's debt held by the public is projected to surge to $56.2 trillion by 2036, representing 120.2% of national income, according to a new analysis published June 8, 2026, by the Center of the American Experiment. The report, written by economist John Phelan, warns that the federal government has spent more than it collects in taxes every single year since 2001, creating a fiscal crisis that can't be solved through tax increases alone. The budget deficit, which stood at nearly zero in 2001, ballooned to $1.8 trillion in 2025 and is forecast to reach $3.1 trillion by 2036.
Federal revenues climbed from $2.0 trillion in 2001 to $5.2 trillion in 2025—a 163% increase—but spending grew far faster, jumping from $1.9 trillion to $7.0 trillion over the same period, a 276% rise. The Congressional Budget Office forecasts revenues will grow another 59% by 2036 to reach $8.3 trillion, but outlays will expand even more rapidly, rising 63% to $11.4 trillion. As a result of this persistent overspending, federal debt held by the public skyrocketed from $3.3 trillion in 2001 to $30.2 trillion in 2025. Because the debt has grown faster than the economy, it went from 31.5% of GDP in 2001 to 99.4% of GDP in 2025.
The report identifies mandatory spending—particularly Social Security and Medicare—as the primary driver behind the explosion. While discretionary spending (which Congress controls through annual appropriations and includes defense) increased 188% between 2001 and 2025, mandatory spending surged 314% over the same timeframe. Looking ahead, the CBO forecasts discretionary spending will rise just 20% by 2036, while mandatory spending will jump another 69%. Social Security and Medicare alone make up 66.1% of all mandatory spending. Net interest payments—the cost of servicing the accumulated debt—present another growing burden. Interest costs hovered around $200 billion annually until 2021, then spiked to $1.0 trillion by 2025 due to increased borrowing and higher interest rates. In 2024, the federal government spent more on net interest than on defense for the first time. By 2036, those interest payments are projected to hit $2.1 trillion, equaling the entire discretionary budget.
The report explains why higher taxes won't solve the problem. Federal spending is forecast to climb from 23.1% of GDP in 2025 to 24.4% in 2036, but the highest revenue the government has ever collected as a share of GDP was 20.0% in 2000. According to the analysis, even if taxes rose to match that record level, there would still be a deficit of 4.4 percentage points of GDP in 2036. The gap between what Americans are willing to pay and what their government spends has become unbridgeable through tax policy alone. The report notes that mandatory spending operates on "autopilot," dictated by ongoing statutory laws rather than annual congressional decisions, making it politically difficult to control despite its outsized role in driving deficits.
Phelan warns that "this ought to be the biggest issue in American politics, but there is depressingly little appetite on either side of the aisle to tackle this growing crisis." The report concludes that the effects will be felt by everyone, including through increasing pressure on state budgets as the federal fiscal situation deteriorates. With entitlement programs eating the budget alive and interest costs set to double over the next decade, the window for addressing the crisis before it becomes unmanageable continues to narrow.