What is Driving the National Debt?

There are four main reasons why the national debt is growing: our aging population, rising healthcare costs, spiraling interest costs, and insufficient revenues. Significant growth in the first three categories is out of step with a tax system that is not designed to collect enough revenues to fund the promises that have been made.

1) Aging Population

Over the next 25 years, the number of people 65 and older will grow faster than the working-age population. The first wave of baby boomers has already reached retirement age, and with people living longer, they will likely spend more years drawing on retirement benefits. In the coming decades, this will drive higher spending on programs that support older Americans, like Social Security and Medicare. 

2) Rising Healthcare Costs

Healthcare costs are rising significantly, driving up the national debt.  

• Federal spending on major healthcare programs, such as Medicare and Medicaid, will climb from 6.0% of GDP in 2026 to 8.1% in 2056, according to CBO projections. 

• Total healthcare spending from all sources will grow to reach one-fifth of the entire economy, according to the Centers for Medicare & Medicaid Services. 

The United States spends more on healthcare per person than other wealthy peer nations. Yet, our health outcomes are generally no better and, in some areas, are worse, including life expectancy, infant mortality, asthma, and diabetes.

Rising healthcare costs affect everyone, including young adults, who tend to lack access to healthcare. More than 13 percent of adults aged 19-34 are uninsured, a higher rate than any other age group.  

3) Spiraling Interest Costs

As the national debt grows, so do the interest payments on it — potentially crowding out opportunities to invest in vital areas like education, research and development, and infrastructure. Interest costs are now the fastest-growing part of the federal budget, already exceeding what we spend on national defense or Medicare. Interest will total a staggering $99 trillion over the next 30 years, according to CBO.  

4) Insufficient Revenues 

It would be one thing if the tax code were designed to fund all the promises made. But currently, the tax system does not generate nearly enough to cover federal spending.  

The tax code is also overly complex, confusing, inefficient, and unfair. For example, it remains riddled with tax expenditures, or “tax breaks,” that provide financial benefits to specific activities, entities, and groups of people. Those tax breaks increase annual deficits and can create market distortions that damage economic growth and productivity. In 2025, tax breaks totaled nearly $2 trillion — more than enough to pay off all outstanding student debt.