Top Economist Warns US Is ‘Wildly Irresponsible’ With $1.99 Trillion Deficit as Interest Costs Top Defense Spending

Economist Justin Wolfers said Monday that the U.S. is running its largest deficit outside a recession or war, with Washington financing tax cuts for the rich through cuts to programs for people who need them.

‘Wildly Irresponsible‘

The U.S. ran a $1.992 trillion deficit in fiscal 2026, Treasury data shows, leaving the national debt at about $40.38 trillion.

“If you looked at the size of the deficit, you must say, well, the government must be responding to some terrible, terrible emergency right now, or they’re being wildly irresponsible. And it’s very much the latter,” Wolfers said in an interview with MS Now.

He added that Washington will “cut benefits for people who need them, cut taxes for people who do not, and borrow the difference from people who aren’t old enough to vote.” Wolfers warned that cutbacks are coming to Medicare and food stamps.

Washington has discovered a brilliant financial strategy. Cut benefits for people who need them, cut taxes for people who don’t, and borrow the difference from people who aren’t old enough to vote. pic.twitter.com/0KMYTbUUH2

— Justin Wolfers (@JustinWolfers) October 19, 2026

Interest Costs Top Defense

The federal government has run a deficit every year since 2002, and since 2016, spending on Social Security, health care, and interest has outpaced the growth of federal revenue.

Net interest totaled $1.052 trillion in fiscal 2026, more than the $965 billion spent on defense.

Moody’s Analytics Chief Economist Mark Zandi said on Sunday that the deficit exceeds 6% of gross domestic product and warned of a “vicious cycle” in which higher rates add to debt and interest payments, pushing rates higher.

Treasury Yields Hit Multidecade Highs

The U.S. Treasury bond yields touched multidecade highs earlier this month, with the 10-year Treasury yield climbing to 5.36% and the 30-year to 5.73%.

At the time of writing, the 10-year Treasury yield was 5.119%, and the 30-year was 5.455%.

Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) closed 0.38% lower on Monday at $90.08 and 0.1% in pre-market trading on Tuesday. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed 0.74% lower at $79.46 and is up 0.40% in premarket.

The 7-10 year bond ETF has a Momentum score in the 30th percentile with a negative price trend across the short, medium, and long term, according to Benzinga Edge rankings.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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