A new report from the Committee for a Responsible Federal Budget is warning that rising interest rates could significantly increase the cost of carrying the national debt over the next decade.

The report, released May 21, says the 30 year Treasury note recently reached 5.2 percent, its highest yield in nearly 19 years. The 10 year Treasury yield also climbed to 4.7 percent, which the group says is about 55 basis points above projections from the Congressional Budget Office.

According to the Committee for a Responsible Federal Budget, if Treasury yields remain about that far above CBO projections across the yield curve, the federal government could face major fiscal consequences.

The group estimates that higher rates could add another 2 trillion dollars to the national debt over the next decade. Under that scenario, federal debt would rise to 125 percent of Gross Domestic Product by 2036. That would be higher than the 120 percent projected under CBO’s baseline.

The report also says federal interest costs could climb sharply. In Fiscal Year 2025, net interest costs were estimated at 970 billion dollars, or 3.2 percent of GDP. If rates remain elevated, the group projects interest costs could reach 2.5 trillion dollars by 2036, or 5.3 percent of GDP.

That would also mean interest payments would take up a larger share of federal revenue. The report estimates interest could consume nearly 30 percent of all federal revenue by 2036, compared with 19 percent in 2025. The group says the long term average has been closer to 12 percent over the past half century.

The Committee for a Responsible Federal Budget also looked at the cost on a per household basis. The report says net federal interest costs per household exceeded 7,300 dollars in Fiscal Year 2025. If rates remain above projections, that figure could rise above 11,000 dollars by 2030 and reach about 17,000 dollars by 2036.

The report warns that rising interest costs could crowd out other parts of the federal budget. The group says the federal government already spends more on interest than on Medicaid, national defense, and total non defense discretionary spending. If higher rates continue, interest costs could exceed Medicare spending in Fiscal Year 2027, making interest the second largest federal program. By 2036, the report says federal spending on interest could approach the amount spent on Social Security retirement benefits.

Another concern in the report is the relationship between the average interest rate on federal debt and the overall economic growth rate. The group says if the interest rate on debt rises above the economic growth rate, debt can become more difficult to control. Under the higher rate scenario, the report says that could happen by 2029, with the gap continuing to widen by 2036.

The report says that combination of high debt and higher borrowing costs can create a cycle where rising interest costs increase the debt, rising debt puts more pressure on rates and growth, and the debt burden grows faster over time.

The report also notes that higher Treasury yields can affect consumers. Higher rates can increase borrowing costs for mortgages, car loans, and business loans. As one example, the group says a 55 basis point increase in mortgage rates would raise the monthly payment on a 500,000 dollar 30 year mortgage by nearly 200 dollars and add about 64,000 dollars over the life of the loan. For a 1 million dollar mortgage, the report says monthly payments would increase by about 350 dollars, with lifetime costs rising by nearly 130,000 dollars.

The Committee for a Responsible Federal Budget says lawmakers need to address the debt in order to reduce pressure from interest costs. The group says deficit reduction could help lower near term inflation pressure, reduce long term crowding out in the economy, and lessen the amount of debt the government must pay interest on in the future.