No Labels, the centrist political organization that has spent 16 years pushing bipartisan solutions in Washington, has quietly released Nightmare on Main Street—a fictional “oral history” narrated from the vantage point of 2029, in which a cascade of weak Treasury bond auctions triggers an economic collapse worse than the Great Depression. It’s a deliberately unsettling document, written in the same near-future dystopian frame as the Citrini Research AI essay that briefly tanked software stocks earlier this year. Its authors believe the timing is not a coincidence, although they pointed out to Fortune their piece actually predated Citrini’s, and they haven’t wiped tens of billions of dollars off software stocks.

“There’s a sense that there are all of these threats gathering on the horizon,” Ryan Clancy, No Labels’ chief strategist, told Fortune. “And probably a recognition that our political system does not seem remotely equipped to deal with any of them.”

The report lands as the U.S. gross national debt recently crossed $39 trillion for the first time—a milestone reached less than five months after it hit $38 trillion. Net interest payments have already surpassed $1 trillion in fiscal year 2026, nearly triple the $345 billion paid in 2020, and have eclipsed defense spending for the first time in modern history. The Congressional Budget Office projects the federal deficit will reach $1.9 trillion in fiscal year 2026 and balloon to $3.1 trillion by 2036.

“Neither party has any credibility on the debt or deficit right now,” Clancy said. “We’ve been on a 25-year binge of spending increases and tax cuts, and both of them have signed off on it.”

The match that lights the fire

The fictional scenario in Nightmare on Main Street centers on a collapse that begins not with a government shutdown or debt ceiling standoff—the familiar Washington theatrics—but with something more technical and far more consequential: Treasury bond auctions that start failing. In the report’s telling, by September 2028, investors have collectively stopped wanting to buy American debt at prevailing yields. The fictional Fiscal Assistant Secretary of the Treasury describes the moment: “We had become a bad credit risk—a deadbeat they didn’t trust to pay back a loan.”

It’s a scenario that has already drawn real-world validation. Former Treasury Secretary Hank Paulson warned recently Congress needs a “break glass” emergency plan for exactly this possibility, a recommendation seconded by the nonpartisan watchdog, the Committee for a Responsible Federal Budget. Shortly after the Iran war began, there were several weak Treasury auctions in which bonds cleared at higher-than-expected yields or drew insufficient buyer demand.

“A couple of bad Treasury auctions doesn’t mean we’re in a crisis,” Clancy said. “But when you start to string enough of them together, it suggests we could have a real problem here.”

The reason a debt crisis is fundamentally harder to solve than the 2008 financial crisis, Clancy argued, comes down to a single brutal logic: “In 2008, the problem was the balance sheets of private institutions like banks, and the government was the fireman. What we’re talking about with a debt crisis is the problem is on the balance sheet of the government. So the fireman has the problem.”

73% of the budget isn’t up for debate

One of the report’s most striking data points is how little of federal spending Congress actually controls. Of the $7 trillion the U.S. spent last year, only 27% is discretionary. The remaining 73%—Medicare, Medicaid, Social Security, interest payments, and other mandatory programs—essentially runs on autopilot, growing automatically under existing law regardless of what Congress does.

That means the knock-down, drag-out government shutdown battles that have become a Washington ritual are, in effect, a fight over a little more than a quarter of the federal ledger.

Meanwhile, the go-to political solutions don’t add up. Eliminating waste, fraud, and abuse—a perennial Washington promise—would be “a rounding error,” Clancy said.

“You could take $100 billion of waste, fraud, and abuse out of our annual budget, which would be a massive achievement,” he said. “That’s 5% of last year’s deficit.”

Even aggressive economic growth won’t close the gap: Research from the National Bureau of Economic Research shows the late 1990s surpluses were only about half attributable to growth, and the current fiscal hole is far deeper, a point that Penn Wharton Budget Model director Kent Smetters previously made to Fortune.

The actual goal, Clancy argued, doesn’t need to be a balanced budget—a political and mathematical near-impossibility. It needs to be getting the deficit-to-GDP ratio down to a level where the economy grows at least as fast as the debt. Last year’s deficit-to-GDP was roughly 6%, growing about three times faster than the economy itself.

Historian Niall Ferguson’s so-called “Ferguson’s Law” adds a darker frame: Once a country pays more in interest than on defense, it often marks the beginning of the end for a superpower. The U.S. crossed that threshold this year. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has made a similar call from the investing side—recently advising clients to hold as much as 15% of their portfolios in gold, a striking vote of no-confidence in dollar-denominated assets.

“When you think about the share of U.S. Treasuries held by foreign countries declining, the share of U.S. dollar reserves held by foreign countries declining, the run-up in precious metals prices,” Clancy noted, “there’s just a lot of signs out there that we’re reaching a point where we can’t keep doing what we’ve been doing.”

The extremism risk

No Labels’ deeper fear isn’t purely economic. The organization, whose core mission is combating political extremism, argues fiscal crises historically create the conditions for radical political actors to gain traction. The report depicts a Tucker Carlson-type demagogue rising to power and DSA-aligned politicians gaining influence in the chaos—two very different ideologies united by the conviction that the entire system needs to be torn down.

“When you look at history and you look at crises, debt crises, that tends to be the moment where really dangerous political actors can start to get some footing,” Clancy said.

The historical precedent he points to: In late 1991, the national debt ranked sixth or seventh among voter concerns in Pew polling on the upcoming presidential election. By election eve in November 1992, it was the number one issue, driven almost entirely by candidate Ross Perot’s relentless focus on deficits and his famous charts. The implication is that a figure willing to weaponize the debt crisis politically could reshape the electorate rapidly.

Washington won’t act until it has to

Clancy is candid that No Labels isn’t expecting immediate legislative action. The organization holds regular bipartisan briefings with members of Congress and supports proposals for a fiscal commission modeled on the Base Realignment and Closure process, where recommendations go to Congress for a single up-or-down vote that cannot be amended. But he is skeptical even that will be enough.

“Washington really is not going to solve this debt problem until they’re forced to,” he said. “There’s no way something this big gets solved with one party alone. Can’t happen. Will not happen.”

That candor may be the most notable thing about Nightmare on Main Street: It isn’t a policy proposal. It’s a warning about what happens if there isn’t one.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, put it bluntly when the $39 trillion milestone hit: “Surpassing $39 trillion in gross debt is an embarrassing milestone that both parties have helped build over decades, and neither seems particularly interested in addressing it before we hit $40 trillion.” The Peterson Foundation projects that threshold will be crossed before this fall’s midterm elections.

Nightmare on Main Street is betting a vivid-enough picture of what happens after $40 trillion, $45 trillion, and $50 trillion might change that calculus. The Citrini essay briefly moved markets. No Labels is hoping this one moves Congress.