The Biggest Contributors to the Growth of the National Debt

The U.S. government’s total public debt outstanding has grown to more than $40 trillion, surpassing that threshold on August 18, 2026.

In the next ten years, the Congressional Budget Office (CBO) projects the U.S. national debt will reach over $63 trillion. What do you suppose will be the biggest contributors to the growth of the federal debt?

Here’s a hint. The two biggest drivers of the national debt are growing faster than the nation’s gross domestic product.

The two factors projected to drive up the national debt the most are health care subsidies and interest payments on the national debt. Writing in December 2024, the Cato Institute’s Michael Cannon points to one of these factors as the most culpable:

The long-term federal debt problem is a health care problem. The Congressional Budget Office projects that only two categories of federal outlays will grow faster than gross domestic product (GDP): health care subsidies and interest payments on the debt. The former is, therefore, the primary driver of the latter.

The CBO revisited its analysis of the growth of federal health care subsidies with the Congress’s Joint Committee on Taxation (JCT) in July 2026. Here’s their summary of where things stand in 2026 and what they project for 2036:

In 2026, federal subsidies for health insurance, net of related payments to the government, are projected to equal $2.4 trillion, or 7.4 percent of gross domestic product (GDP). In CBO and JCT’s projections, those subsidies grow by 65 percent, reaching $3.9 trillion, or 8.4 percent of GDP, in 2036. Subsidies for Medicare contribute most to that overall growth, increasing by $900 billion.

The chart below from the report shows how the trillions in federal government health care subsidies are divided among various programs.

Faster-than-GDP growth is not a bug but a feature of federal health care subsidies. Cato’s Romina Boccia and Ritvik Thakur find that excessively expensive characteristic dates all the way back to the beginning of Medicare:

Since Medicare’s inception in 1966, its spending has grown about 1.5 times faster than the economy. Figure 1 shows the growth of gross Medicare spending and nominal GDP relative to their starting values in 1967, with Medicare consistently growing at a faster rate than GDP. This track record shows that GDP growth has not—and cannot—keep pace with Medicare spending under current policy. Because Medicare accounts for nearly half of projected additions to the federal debt over the next decade—and because its spending grows faster than the economy—higher GDP growth alone cannot stabilize the debt-to-GDP ratio.

Sixty years after it was made an entitlement, Medicare is long overdue for serious fiscal reform, as are all the other federal health care subsidy programs. Independent Institute’s John C. Goodman has some thoughts on how to address them so they work better for Americans while remaining fiscally sustainable.