Rep. Thomas Massie (R-Ky.) said Tuesday that all government spending is ultimately paid for by citizens, as projections show the U.S. deficit widening to 6.1% of GDP in 2027, the largest among five major developed economies.
Who Pays for Spending
In a post on X, Massie said some people are missing investor Peter Schiff’s point that “all government spending is paid for by citizens,” through taxes, inflation, interest, and deferred taxes in the form of debt.
Massie, one of the legislation’s most persistent Republican critics, said the Big Beautiful Bill raised spending by hundreds of billions of dollars over the next few years, “so it increased what YOU MUST PAY.”
Schiff had argued that the bill made the federal government “bigger and more expensive than ever” and that the burden on the public “will more than offset those fake tax cuts.”
U.S. Deficit Set to Outpace Developed Peers
According to projections shared by The Kobeissi Letter, the U.S. federal deficit is projected to reach 6.1% of GDP in 2027, which would be the highest level since 2012 excluding the pandemic years of 2020 and 2021.
That would be the biggest among the U.S., the U.K., Germany, France, and Japan.
The Treasury Department’s Fiscal Data put the federal deficit at about $1.97 trillion so far this fiscal year, while the national debt stands at about $40.28 trillion.
“Deficit spending is only accelerating,” the commentator added.
Debt and Yields Show the Strain
The 10-year Treasury yield touched 5.36% last week, and the 30-year reached 5.73%, both the highest since 2002.
The Federal Reserve raised the federal funds rate by 25 basis points last month, and officials’ median projection in the September dot plot points to one more quarter-point hike later this year.
The September consumer price index is due Wednesday, with economists expecting headline inflation to rise to about 3.7% from 3.4% in August, with core CPI near 2.4%.
Wells Fargo & Co. (NYSE:WFC) CEO Charlie Scharf listed persistent fiscal deficits among the sources of uncertainty on the bank’s earnings call on Tuesday.
Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) closed 0.12% higher on Tuesday at $89.54 and climbed 0.12% in early premarket trading on Wednesday. Meanwhile, the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed 0.41% higher on Tuesday at $78.37 and climbed 0.24% in premarket.
Benzinga edge rankings indicate the iShares 7-10 Year Treasury Bond ETF has a Momentum score in the 28th percentile.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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