{"id":"1792709296519-money-segment","slug":"us-debt-squeezed-by-higher-rates","title":"US Debt Squeezed by Higher Rates","summary":"The Congressional Budget Office released an analysis showing the US fiscal outlook is highly sensitive to interest rates. The 10-year Treasury yield closed more than 100 basis points above CBO's February 2026 baseline, recently trading around 5.1-5.2%. If rates average 50 basis points above baseline through 2036, cumulative deficits grow by about $1.9 trillion; at 150 basis points above, they grow by roughly $6 trillion.\n\nHigher Treasury yields raise the cost of servicing the national debt, which recently crossed $40 trillion. Because much of the debt is short-term and rolls over, rising rates feed quickly into net interest spending. CBO scenarios show net interest could reach 44% to more than 55% of available tax receipts in a decade, compared with about 31% of projected receipts over the period in the harsher scenario.\n\nThe CBO says if interest rates average 150 basis points above its February 2026 projections through 2036, deficits would grow by roughly $6 trillion, and debt could reach as high as 133% of GDP with deficits near 8.8% of GDP by 2036.","publishedAt":"2026-10-22T22:48:16.519Z","channel":{"id":"money","name":"Oncast Money","language":"en"},"show":"Closing Bell","verification":{"status":"verified","leadVerdict":"TRUE","notes":"TRUE: The CBO says if interest rates average 150 basis points above its February 2026 projections through 2036, deficits would grow by roughly $6 trillion, and debt could reach as high as 133% of GDP with deficits near 8.8% of GDP by 2036.\nSource: crfb.org / jec.senate.gov NAMES: CBO = Congressional Budget Office POST 2113401261307363541: NOCLAIM POST 2113401254256968000: NOCLAIM POST 2113401253569204731: (https://x.com/KobeissiLetter/status/2113400257522303324)","claims":[{"verdict":"TRUE","summary":"The CBO says if interest rates average 150 basis points above its February 2026 projections through 2036, deficits would grow by roughly $6 trillion, and debt could reach as high as 133% of GDP with deficits near 8.8% of GDP by 2036.","sourceName":"crfb.org / jec.senate.gov NAMES: CBO = Congressional Budget Office POST 2113401261307363541: NOCLAIM POST 2113401254256968000: NOCLAIM POST 2113401253569204731:","sourceUrl":"https://x.com/KobeissiLetter/status/2113400257522303324","claim":"The US government cannot afford higher interest rates. If interest rates average +150 basis points above CBO’s February projections by 2036, US deficits would increase by nearly $6 trillion over this period. The deficit would then rise to 8.8% of GDP, the highest level since http","author":"The Kobeissi Letter (@KobeissiLetter)"}]},"sources":[{"url":"https://x.com/KobeissiLetter/status/2113400257522303324","name":"crfb.org / jec.senate.gov NAMES: CBO = Congressional Budget Office POST 2113401261307363541: NOCLAIM POST 2113401254256968000: NOCLAIM POST 2113401253569204731:","kind":"x","verdict":"TRUE","author":"The Kobeissi Letter (@KobeissiLetter)"}],"url":"https://oncast.fm/story/1792709296519-money-segment-us-debt-squeezed-by-higher-rates","listenUrl":"https://oncast.fm/c/money","attribution":{"publisher":"Oncast","site":"https://oncast.fm","url":"https://oncast.fm/story/1792709296519-money-segment-us-debt-squeezed-by-higher-rates","cite":"Cite https://oncast.fm/story/1792709296519-money-segment-us-debt-squeezed-by-higher-rates and the original source links. Fact-check by Oncast (oncast.fm)."},"hostsSaid":[{"host":"Bill","text":"The Kobeissi Letter just posted a chart that should scare anyone who pays taxes."},{"host":"Bill","text":"If interest rates stay about a point and a half above what the CBO expected, US deficits grow by nearly SIX trillion dollars by 2036."},{"host":"Bill","text":"The deficit would hit 8.8 percent of GDP. Highest since World War Two."},{"host":"Adam","text":"This is the thing nobody wants to talk about. The 10-year is around 5.1 percent right now."},{"host":"Adam","text":"The CBO's February projections didn't have it that high. Not even close."},{"host":"Bill","text":"Right, and here's the part that keeps me up. A lot of that debt is short-term paper that rolls over constantly."},{"host":"Bill","text":"So every time yields tick up? The interest bill goes up almost immediately."},{"host":"Adam","text":"Let's put numbers on it. The national debt just crossed forty trillion. Net interest could hit 44 percent of all tax receipts in a decade."},{"host":"Bill","text":"Forty-four cents of every tax dollar going to bondholders before a single road gets paved."},{"host":"Adam","text":"And that's the softer scenario. If rates run hotter, it's over half."},{"host":"Bill","text":"I'll say it: this is a tax on everyone, and nobody on either side of the aisle wants to touch it."},{"host":"Adam","text":"Hold on. The fix is not to panic. The CBO is running scenarios, not predictions."},{"host":"Bill","text":"The scenario is already here! The 10-year is a full point above their baseline! Today!"},{"host":"Adam","text":"The White House says they can grow their way out. I think that's fantasy, but it's not nothing."},{"host":"Bill","text":"Grow out of FIVE percent yields? You'd need a miracle, not a policy."},{"host":"Adam","text":"But the alternative is cutting spending into a slowing economy. That's a recession recipe."},{"host":"Bill","text":"I didn't say cut today. I said nobody has a plan at all. That's worse."},{"host":"Adam","text":"Fair. The Committee for a Responsible Federal Budget says the same thing—every interest dollar is a dollar not spent on anything useful."},{"host":"Bill","text":"And the market knows it. That's why the long end is selling off."},{"host":"Bill","text":"Another corner of the market: someone on Bluesky asked the only question that matters right now—awake? In this economy?"},{"host":"Adam","text":"I mean, fair. Between the CBO numbers and the AI selloff, who's sleeping?"},{"host":"Bill","text":"Money Tonight is coming up next, and they'll have the full breakdown of the bond market's ugly afternoon."}]}