Not sure why you're getting downvoted. I thought you were wrong, looked it up, and you're correct.

In 2025, federal gov revenues (total, not just tax) were $5.26T: https://fiscaldata.treasury.gov/americas-finance-guide/gover...

In 2026, entitlements plus interest is projected to cost $5.45T: https://fiscaldata.treasury.gov/americas-finance-guide/feder...

Entitlement spending has its own tax base though doesn't it? We could just raise taxes right?

Yeah, cut the $1T/year in defense spending and raise taxes to pay down the debt (to cut $1T/year in interest expenses) and balance the budget. Entitlements remain because workers are entitled to those benefits they worked for. The same workers the wealthiest need to suck $5T+ a year of profit out of the economy.

We used to have 94% top tax bracket rate at one point, and higher tax rates in general. We’ll find the will to raise taxes as soon as the bond market compels the spineless in Congress to find the will (as the cost of debt continues to rise into the future), because you cannot deceive the bond market.

https://taxfoundation.org/data/all/federal/historical-income...

https://www.axios.com/2026/09/27/rates-borrowing-yields-fisc...

- In projections that the Congressional Budget Office produced last February, net interest costs are already at $1 trillion this year and on track to reach $2 trillion by 2035, meaning that much of federal spending is needed just to service old bills.

- But those projections assumed 10-year Treasury yields were in the ballpark of 4.3%. They're now nearly a full percentage point higher than that.

- In startling numbers that CBO released this week, in a scenario in which interest rates were 1 percentage point higher than its baseline, debt held by the public would grow to 222% of GDP in 2056, 47 percentage points higher than the baseline.

https://www.cbo.gov/publication/62758

Everyone thinks they can grow their way out of deficits, but it's always a pipe dream. It results in a growth obsessed economic plan that then causes all kinds of other stresses (such as being petrified of cutting immigration, for example). So much of this is all happening in lieu of politicians just being willing to have honest conversations with voters and take a risk of blowback. But I think people are over it and will value authenticity these days enough that it's a false economy. Just tell people the truth.

The Macron government went out of its way to cut taxes for the wealthiest percentiles. Debt exploded, costs were cut, infrastructure went unmaintained (which only ended up adding to structural costs), but the GDP growth remained anemic.

However the wealth of the wealthiest increased substantially, so there's that, I guess.

If France or Germany are involved, it’s doubtful the ECB would be able to impose austerity.

I think austerity measures are counterproductive. After seeing how they worked (or rather didn't work) when imposed on multiple nations by the world bank, and self imposed in the UK and Germany, I don't think austerity works at this state of inequality.

Perhaps short periods of austerity work in decades past when enough of the foundation was still established for public goods, but a this point of neoliberal economics, austerity just causes economies to slow or shrink

> must bring deficit-to-GDP ratio from ~5.8% down to 3% within 3 years

Or what? (Seriously.)

Greece was forced to the table because the market wouldn’t lend to it. So long as France has lenders, why does this rule matter?

While the far right in France has been gaining traction with full throttle populism on fertile grounds, I wouldn't overestimate their chances to make it to the presidency and discount the fierce opposition that will be expressed the day people cast their vote.

It is still a weak (but loud) political movement which lacks backbone and network.

I'll comment under my own post about "why i think this is happening" - it's the fact that the average age of the population in the world is higher than it has ever been, especially in richer countries. Just like the "housing theory of everything" posts that circulated around some time ago, I think that is the core reason why so many illogical decisions are being thrown around.

I don't have deep knowledge, other than a bunch of "pattern matchings" I've done throughout my readings, but as people get older, on average, their wants/needs change over time. Older people, especially as they get closer to retirement age, have more free time as well. Implicitly, these desires eventually bubble up into economic/political action, that's more or less unprecedented. It would be very cool to research this more in depth, but unfortunately i'm in the wrong field.

Normal economic policy hasn’t really been true since the 2007 financial crisis. Rates were kept at historically low rates because growth was anemic and everyone had seen Japan fail to pump up its economy. To some degree there was also thinking that countries in this situation should provoke inflation to get the growth flywheel growing again; at least the fixes to inflation are known vs deflation.

Well, it turns out that we did it with the COVID economic shocks, and for a while there was talk of a “soft landing” but that’s all but disappeared from the conversation.

Well, it's still complicated because of the global economy.

- Most of the AI Companies are HQed in the US, and that's the 'hot thing' for the market overall

- Google and Apple have enough presence (i.e. some may be doing tax things but...) in the US and at least one of them has gotten 'too big to properly antitrust'.

- If we look deep enough, even some of the fanciest ASML tech is a result of IP sharing from US companies that are almost certainly government backed (i.e. ASML might be the ones working with other companies to help make it useful/scalable, but the tech is invented here.)

Ironically, something I would have listed at the top 10-15 years ago but is now last on the list...

- For the last (well, now) 80 years the US has been able to project an outward image of overall economic stability and relative growth; The closest it came to a crisis in the past was when the Bretton-Woods system collapsed and France came over and collected their gold.

On the flip side, there is the 'guard'.

- Any current bondholders have to choose between holding at the current rate, or selling at a discount. It becomes a 'Well do we really thing it will all fall apart before then or do we just hold?'. Because any new bonds, even at the current rate, would be carrying that risk on the open market if a sell-off occurred. IOW 'Is a bond I have now less the arbitrage cost going to be worth more than just holding it'.

What's important is what happens next. If we look at the Bretton-Woods collapse, there were a number of actions taken, many (most?) of them questionable, however it was pulling a bunch of levers at once and unpulling versus debating which lever to pull.

There is the confounding factor where parties are arguing that there is market manipulation going on, that changes the question of whether to hold onto existing bonds rather than making other options. After a certain maturity percentage one has to ask whether you hold or sell based on climate.

There is an easy solution to make Social Security solvent. Uncap the contribution. Problem solved.

"Means testing" is the bad Social Security idea of the year. SS isn't a welfare program. Trimming benefits, changing retirement date (for all) and uncapping contributions are much more palatable to voters.

> The primary issue is Social Security.

No it's not. It's about 15% of the 2 trillion dollar defecit. Whoever told you that mislead you.

Social Security is funded by the people paying in, plus the money in funds like OASI. Yes, OASI is treasuries, so it’s connected, but the reason OASI exists is to cover the changing demographics as baby boomers retire. It’s not designed to be, long-term, the way the Social Security system works. The idea is that you collect income on the boomers greater than payouts while their cohort is in the workforce, and the pay that money back out when they retire.

Yes, there are reasons why this isn’t working out as planned. But the idea that “Social Security is the biggest driver of spending” is not a cogent argument.

Social security is only collected from incomes 184K and below.

It’s literally not a spending problem at all.

> and nobody wants to do anything to cap its costs such as means testing or straight up lowering the amount it can pay out.

You forgot the huge one, which is uncapping the amount of income it is applied to.

> and nobody wants to do anything to cap its costs such as means testing or straight up lowering the amount it can pay out

Yes because everyone paid into it and wants their money back with interest as promised? This isn’t weird.

There are more 401k millionaires now than ever before. I wonder if in 20-25 years decrease in SS payout will be more palatable as people rely on other, far more valuable, retirement accounts.

On the other hand, I’ve been paying into ss for like 3 decades easy. Bitch better have my money!

Ah yes, let's make our poorest citizens even more poor. Means testing doesn't work, read a book.

It’s not Social Security, it’s Health and Human Services. It’s been the top line item in the federal budget for several years, and it’s growing at the fastest rate and has the largest unfunded liabilities.

Social security is easy to fix. Just raise the retirement age. Or do nothing and benefits drop by 25% or whatever it takes to become balanced based on current tax revenue.

Good luck rationing hip replacements and breast cancer treatments whose provision is statutorily required by law and whose cost will continue to rise with inflation.

None of this even begins to consider interest on the debt. As interest rates continue to rise and the debt continues to grow this line item will eventually dwarf everything.

Social Security is chump change compared to these two. But at least it’s nominally fixable by faking the CPI numbers used to set the cost of living increases. You can’t charge less for hip replacements or cancer treatments, they cost what they cost.

Social Security is not the issue no wealth tax, capital gains tax being less than income tax are the problem. Social security and government expenses going up are the symptom of the same problem ie not taxing capital gain which has resulting in prices for everything to keep shooting higher than incomes.

I'd question all of the "stocks keep marching higher" and the "it's not irrational" and the "only way out of this mess is inflation" narratives.

Take a look at the S&P 500 vs. the equal-weight S&P 500 over the last 6 months:

https://finance.yahoo.com/quote/ES%3DF/

https://finance.yahoo.com/quote/RSP/

The equal-weight S&P 500 has been on a steady march downwards since it became apparent in August that the Iran war was not even close to over, and is now getting close to correction territory (7% down). This is exactly what you would expect given the news. It is the opposite of what you would expect from the inflation story, which would lift the earnings of everything in the S&P 500 (which, after all, is composed of the 500 largest companies and overweights monopolies or oligopolies in broad industries).

The S&P 500, however, has been basically flat over that same time period, holding at the 7700 level. It basically has a leg down over the course of the week, and then always pumps on Friday to regain the previous level. I'm not sure if it's government intervention or irrational exuberance in a small set of AI stocks, but the divergence between the broad market and the S&P 10 is becoming increasingly noticeable.

Stocks keep marching higher, to stable yet irrational levels, because the .1% need to put their money somewhere. That level of wealth grows so quickly that it's impossible to know what to do with it. A literal embarrassment of riches.

Don't get me wrong, I want to be in that category, but still.. this is our reality. It's an interesting experiment we are running. Without external factors like global wars and climate catastrophe, could the market even crash in our current environment?

Common misconception, this only affects debt that is locked in with long-term notes like the 10 year. A significant amount of debt is short term and refinances continuously, so the 10 year would go sky high if inflation climbs as investors demand a higher premium to invest with the treasury. So it doesn't evade all debt unfortunately

Stocks historically haven't performed well during periods of high inflation.

Interest rates were historically low 3-4 years ago.

Yes the AI investment bond market is so large it is literally competing with the government.

But why don't they want to buy treasury bills. Could it be because they see the US decoupling from the global trading network and predict we will be poorer? Or we are losing the reserve currency status? Or we don't have the political discipline to run a responsible budget and will hit a fiscal crisis. Who cares if you earn 8% on your money if we don't have market access around the world for our goods and services and we get less products because we erect barriers that mean less goods enter our market. We will feel as poor as we will become.

Steady march towards Argentina

I'm unconvinced that "balance the budget" is the issue here.

Interest rates are a function of inflation and joblessness. Both of which the current administration has created via terrible (for the country; great for the family members of the administration) policies.

The terrible policies are destroying jobs and causing the prices of goods to go up, thus increasing interest rates. The administration could balance the budget, but that would not correct the interest rate problem unless they also stop enriching themselves at the expense of the rest of the country.

A reasonable capital gains would also solve the problem. the idea that money you don't work for gets taxed less than money you do is absurd

Taxing the rich would easily be enough to plug the hole, and it wouldn't even affect them in a meaningful way.

https://m.youtube.com/watch?v=AmzadQE9UD4&pp=ygUKQmlsbGlvbmF...

It is absolutely a spending problem. The Department of Agriculture has 100k employees and a $500B dollar budget. That’s just one department of many. Throw a dart at the MTS [1] report and you’ll find dozens of other agencies with similar levels of spending.

There are plenty of places to cut spending before we start raising taxes on the W2 wage earners that are contributing the most to federal tax receipts.

How would nationalizing health insurance even make a dent in spending? Ultimately the same amount of healthcare will be consumed. You are truly clueless about the federal fisc if you think these are even remotely serious ideas for fixing the federal budget deficit.

1. https://fiscaldata.treasury.gov/static-data/published-report...

I am getting way too old for this. No more "both sides." Look at the data. If you want a balanced budget, there is one party to avoid.

A good faith cooperate tax would solve most if not all of our deficit, and arguably increase our GDP growth.

A 5% revenue tax on the fortune 500 would get us half way there. I could not quickly get a number for total revenue of more than the fortune 500, but I would not be surprised if a 3% VAT would cover the entire deficit. We lose so much tax revenue due to all the loop holes deliberately left in the corporate tax code.

On top of that, ban stock buy backs entirely, that way more of the record breaking profits have to go to wages or other means of investing in the business.

> outside of a world war.

There you go. After ww2 USA just inflated away its debt. It's actually chartered territory.

If you cross your eyes and squint a little bit, the following categories of 2026 spending are around the same size:

    $ 1   T    : total defense (roughly)
    $ 1.7 T    : total social security
    $ 1.1 T    : total medicare
    $ 0.7 T    : total medicaid
    $ 0.7 T    : total other entitlements (SNAP, VA, etc)
    $ 1.1 T    : net interest on the debt
    $ 1.0 T    : all other discretionary spending

So ... we can't fix this by doing any one thing. Even if we were willing to completely end social security (while keeping the separate contribution tax), that wouldn't be enough. If we threw away our military entirely, we would only be half way there.

We need to do everything a little bit, all at once.

Raise taxes - corporate and personal, on every bracket, progressively more on the rich ... but this will not even be half of enough because of the strength of the debt bomb and the global flexibility of corporations.

Cut defense spending - but not too much, because we also need to provide funding to repair alliances, rebuild our ancient navy, and rebuild our standoff and interceptor stockpiles after the recent middle east adventurism.

Repair social security - cut benefits, add a means test, raise the contribution amount and limits ... lots of things to do here.

Fix health care - it's just too damn expensive across the board; the US pays for this in the VA, medicare, medicaid, and the poor health of its workforce. I have no idea where to start on this one.

The CBO has a ton of data on this kind of thing. I like their budget options page for exploring the forecasts for specific changes. Of course it's not as simple as adding the numbers together to get to the deficit, but it's a good place to learn more and ground some assumptions.

https://www.cbo.gov/budget-options

I got some of these numbers from:

https://www.cbo.gov/publication/62105

I used Claude to research this, but I wrote the post myself.

According to the CBO, the TCJA and 2025 cuts/extensions have reduced revenues by about $430B per year. That's only 20% of the current annual deficit. It's just so small compared to the trillions per year in entitlement spending. And of course, that's just a first-order reading of the tax cuts. The second-order effect is that the tax cuts led to more private sector spending and investment, which spurred a little more GDP growth. The CBO estimates $2.6T of cumulative GDP growth as a result of the tax cuts through 2028.

https://www.cbo.gov/publication/54994

So that's about $52B per year in taxation added back on that extra GDP growth, so the net effect of the cuts are around $380B reduced federal revenue per year, or 18% of the deficit.

18% of the deficit is a lot but if you could snap your fingers and undo it, you now have a $1.7T problem instead of a $2.1T problem. Eventually you have to look at entitlements. There's just no way around it.

The effective tax rate has actually not changed that much in decades, regardless the “tax cuts” (more like “tax reallocations”)

That's because even fully undoing those things wouldn't be sufficient to fix the deficit. When federal revenue is $5 trillion, entitlements cost $4 trillion, and interest on the existing debt is $1 trillion, you just fundamentally can't balance the budget without cutting entitlements. All of the revenue is already spoken for before funding anything in the rest of the government!

Good point. Maybe it’s higher expected real growth from AI?