Donald Trump is projected to return to the White House next January, according to the Associated Press, and is poised to spur the most dramatic reimagining of the staffing of government in more than a century.

That’s because Trump has vowed to revive Schedule F, a controversial abortive effort at the end of his first term to strip the civil service protections of potentially tens of thousands of career federal workers in “policy-related” positions, effectively making them at-will employees. Trump and many of his former staffers have frequently bemoaned that “rogue bureaucrats” inhibited his policymaking power during his first stint in the White House.

Though President Biden quickly rescinded Schedule F when he took office in 2021—before any positions could be converted out of the federal government’s competitive service—that hasn’t stopped Trump and his allies from working on the initiative in absentia. Both the Heritage Foundation and America First Policy Institute, which have organized dueling unofficial transition projects have endorsed reviving Schedule F, going so far as to creating lists of upwards of 50,000 current career civil servants to strip of their removal protections and threaten with termination.

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What Trump’s win means for the federal workforce https://t.co/rCiwJi8BUN

— Nextgov/FCW (@NextgovFCW) November 6, 2024

He called himself a simple onion farmer, a Mayan Indian with four kids and a fourth-grade education.

U.S. prosecutors knew better.

By his late 30s, Felipe Diego Alonzo had built a crime route stretching from Central America to Texas, allegedly paying off Mexican drug cartels along the way. He tooled around Guatemala’s western highlands in a loaded silver Ford Ranger pickup. When the police finally raided his ranch, they found a study in rural narco-chic: wooden chalets, a swimming pool, a show horse valued at $100,000.

What they didn’t find was a narco. Alonzo’s business “was more profitable than drug trafficking,” said one of the Guatemalan officials who detained him.

Alonzo was moving people.

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As smuggling rings made billions from migrants, the U.S. was sidelined https://t.co/QKiCwSIpZx

— Mary Beth Sheridan (@marybsheridan) November 1, 2024

Payments from government entitlement programs — transfer payments — are the fastest-growing major component of citizens’ personal income. Such transfers are the third-largest source of personal income: In 2022, the average citizen received almost as much from government transfers ($11,500) as from investments ($12,900), and more than one-quarter as much money as was obtained from work. This average citizen received six times more (adjusted for inflation) in government transfer payments than in 1970, during which span income from other sources increased less than half as much. Transfers’ share of total (inflation-adjusted) personal income has more than doubled since 1970, from 8.2 percent to 17.6 percent in 2022.

The Washington-based Economic Innovation Group, which promotes economic dynamism, has released a report, “The Great ‘Transfer’-mation,” explaining how swiftly U.S. communities became dependent on government transfer payments. In 2022, Americans received $3.8 trillion in government transfers, 18 percent of all personal income. In 1970, not even 1 percent of counties received one-quarter or more of personal income from transfers. By 2000, 10 percent did; in 2022, it was 53 percent. This is certain to increase as the population ages.

The primary explanation: the aging U.S. population.

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https://t.co/O2tuE8fr4b
A mountain of government payments buries the myth of American self-reliance

— The Good Shepherd (@HoyasFan07) October 30, 2024

The Death Spiral is one of the main Pentagon Pathologies. The American people devote ever greater resources to their defense while receiving less and less in return. The Air Force had 10,387 aircraft in 1975 when the Military Reformers began their work in earnest. Today the Air Force has 5,288. The Navy had 559 active ships in 1975. Today the fleet has only 296. The Pentagon’s base budget is more than 60% higher today than it was in 1975, when adjusted for inflation. The American people simply spend more and receive much less in return for their defense dollars.

An argument can be made that modern military equipment is more expensive because of the capabilities they provide the troops. That is extremely debatable because many of the high-profile acquisition programs over the past 25 years have been underwhelming at best, and often complete failures. It is difficult to find anyone who will honestly say the Littoral Combat Ship was worth the effort.

Left unchecked, the acquisition Death Spiral’s inevitable destination is unilateral disarmament. Norman Augustine, a former DoD official and Lockheed Martin CEO predicted in 1983, with only a hint of satire, that by 2054, “the entire defense budget will purchase just one aircraft. This aircraft will have to be shared by the Air Force and Navy 3-1/2 days each per week except for leap year, when it will be made available to the Marines for the extra day.”

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At the current spending rate, in another generation we will have a lot of rich contractors and no aircraft or Naval fleets to speak of https://t.co/k4XV5gsk7Z

— Responsible Statecraft (@RStatecraft) October 24, 2024

Private Medicare insurers got about $4.2 billion in extra federal payments in 2023 for diagnoses from home visits the companies initiated, even though they led to no treatment, a new inspector general’s report says.

The extra payments were triggered by diagnoses documented based on the visits, including potentially inaccurate ones, for which patients received no other medical services, the report says. Insurers offering private plans under Medicare, known as Medicare Advantage, are paid more when patients have costly conditions.

Each visit was worth $1,869 on average to the insurers, according to the Office of Inspector General for the Department of Health and Human Services. The findings are similar to those of a Wall Street Journal investigation published in August. It showed that insurers between 2019 and 2021 pocketed an average of $1,818 for each visit based on diagnoses for which people received no other treatment.

The OIG recommended in Thursday’s report for the first time that Medicare restrict or even cut off payments for diagnoses from these visits. 

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It is official now that the @HHSOIG has determined that #MedicareAdvantage health plans w/ @UHC leading the way received over $4B in diagnosis upcoding from home visits. Medicare Paid Insurers Billions for Questionable Home Diagnoses, Watchdog Finds https://t.co/OO1R4Alcwk

— Ed Gaines (@EdGainesIII) October 24, 2024

Global public debt is set to reach $100 trillion, or 93% of global gross domestic product, by the end of this year, driven by the US and China, according to new analysis by the International Monetary Fund.

In its latest Fiscal Monitor — an overview of global public finance developments — the IMF said it expects debt to approach 100% of GDP by 2030, and it warns that governments will need to make tough decisions to stabilize borrowing.

Debt is tipped to increase in the US, Brazil, France, Italy, South Africa and UK, according to the IMF report, which urges governments to rein in debt.

“Waiting is risky: country experiences show that high debt can trigger adverse market reactions and constrains room for budgetary maneuver in the face of negative shocks,” it said.

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Global public debt is set to reach $100 trillion, or 93% of global GDP, by the end of this year, driven by the US and China, according to new analysis by the IMF https://t.co/3beTtprVZ9

— Bloomberg Markets (@markets) October 15, 2024

The start of a Fed rate-cutting cycle is a huge moment for the international financial system. Central banks in emerging markets can loosen a little without fearing a run on their currencies. Indonesia’s central bank has stopped defending the rupiah and dared to cut rates. India’s Sensex stock index hit an all-time high on Thursday as markets anticipate a new world of abundant liquidity and surging inflows of foreign funds.

The Fed’s jumbo half-point cut is transmitted instantly to the 40-odd countries and currency boards linked to the US dollar in one way or another. These regions were forced to import the most aggressive tightening cycle in 40 years through their exchange rates, whether or not their local economies were synchronised with the US cycle….

But there is a large caveat to this rosy global picture. It all depends on whether the Fed is ahead of the curve and delivers a soft landing; or whether it is behind the curve, has misjudged the delayed effects of past tightening, and has already let recessionary dynamics take hold.

These binary outcomes can have drastically different consequences for the world.

Mislav Matejka, equity strategist at JP Morgan, says there have been four soft landings and eight recessions in the last 12 Fed cycles. The “softs” delivered stock market gains of 20pc or so over the following year. The “hards” led to months of sell-offs, snowballing into wipeout crashes in 2001 and 2008. This time the starting point is stretched after a 26pc rise in Wall Street’s S&P 500 index over the last year.

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Enjoy the torrid Fed rally, but the world is not out of the woods yet https://t.co/of6TpXposG

— Felix Randal (@felixrandal) September 20, 2024

The FBI said on Wednesday that it had disrupted a Chinese hacking group nicknamed “Flax Typhoon”  that targeted critical infrastructure in the United States.

The Flax Typhoon hackers installed malicious software on thousands of computers and other internet-connected devices including cameras, video recorders and routers.

This created a botnet — a massive network of infected computers.

Universities, government agencies, telecommunications providers, media organizations and NGOs were among the targets, the FBI said.

“Flax Typhoon’s actions caused real harm to its victims, who had to devote precious time to clean up the mess when they discovered the malware,” said FBI director Chris Wray.

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A hacker group known as Flax Typhoon was able to infect hundreds of thousands of devices around the world, authorities said. China has denied any involvement in the malicious botnet.https://t.co/FoeAA9IPMg

— DW News (@dwnews) September 19, 2024

The Congressional Budget Office (CBO)…[recently] released new ten-year budget and economic projections – an update from its February baseline – again confirming that the national debt is on an unsustainable path. According to CBO’s new projections:

Debt held by the public will reach a new record by the end of Fiscal Year (FY) 2027 – 106.2 percent of GDP – and rise to 122.4 percent of GDP by the end of 2034.

The budget deficit will rise to $1.9 trillion (6.7 percent of GDP) in FY 2024 and $2.9 trillion (6.9 percent of GDP) by 2034, totaling $22.1 trillion over the 2025-2034 budget window.

Interest costs will reach a near-record 3.1 percent of GDP this year – exceeding defense and Medicare spending – set a new record next year and grow to 4.1 percent of GDP by FY 2034.

Under CBO’s latest baseline, federal debt held by the public will grow by $23 trillion through FY 2034, from over $27 trillion today to nearly $51 trillion by the end of 2034. As a share of the economy, debt will rise from 97.3 percent of Gross Domestic Product (GDP) at the end of 2023 to 106.2 percent by 2027 – surpassing the prior record set just after World War II – and 122.4 percent of GDP by 2034. Debt in 2034 will be $2.4 trillion and 6.4 percent of GDP higher than projected in February.

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📈 In its latest budget and economic projections released today, @USCBO again confirmed that the national debt is on an unsustainable path:

➤ Debt held by the public will reach a new record by the end of FY 2027, rising to 122.4% of GDP by the end of 2034.

➤ The budget… pic.twitter.com/22RnFOTbDh

— CRFB.org (@BudgetHawks) June 18, 2024

Amber and Devin Weise lived in distant states when they met in an online social media group for Christian singles. They quickly became a couple, spending hours texting or talking on video chat. After several months of long-distance dating Devin wanted to propose, but thought it was proper and more romantic to do it in person.

Amber hinted she’d be OK with a proposal on a video call. Devin proposed and sent the ring in the mail.

It wasn’t until after they married that they learned the federal disability benefits program Amber relied upon penalizes couples who marry. Amber lost her monthly income check and the health care that came with it.

Amber is one of 7.4 million people who rely upon Supplemental Security Income, or SSI, a federal program that provides monthly cash assistance to disabled and older people with little income and resources. And for Amber and others, being on SSI is also the way they get health insurance.

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Couples say they can't get married because of this government program's outdated rules. – Social Security's SSI program for people with disabilities requires couples to have no more than $3,000 in assets via NPR https://t.co/WZnjFejpUz

— Olav Mitchell Underdal (@omunderdal) June 20, 2024

Even more striking to me are the political, social, and cultural resemblances I detect between the U.S. and the USSR. Gerontocratic leadership was one of the hallmarks of late Soviet leadership, personified by the senility of Leonid Brezhnev, Yuri Andropov, and Konstantin Chernenko. 

But by current American standards, the later Soviet leaders were not old men. Brezhnev was 75 when he died in 1982, but he had suffered his first major stroke seven years before. Andropov was only 68 when he succeeded Brezhnev, but he suffered total kidney failure just a few months after taking over. Chernenko was 72 when he came to power. He was already a hopeless invalid, suffering from emphysema, heart failure, bronchitis, pleurisy, and pneumonia.

It is a reflection of the quality of healthcare enjoyed by their American counterparts today that they are both older and healthier. Nevertheless, Joe Biden (81) and Donald Trump (78) are hardly men in the first flush of youth and vitality, as The Wall Street Journal recently made cringe-inducingly clear. The former cannot distinguish between his two Hispanic cabinet secretaries, Alejandro Mayorkas and Xavier Becerra. The latter muddles up Nikki Haley and Nancy Pelosi. If Kamala Harris has never watched The Death of Stalin, it’s not too late.

Another notable feature of late Soviet life was total public cynicism about nearly all institutions. Leon Aron’s brilliant book Roads to the Temple shows just how wretched life in the 1980s had become.

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"Are We the Soviets?" After four happy years at @opinion, it was time for a change. So here's my first column for @TheFP, with thanks to @bariweiss for recruiting me to her happy band. https://t.co/Zwxj3ChLLb pic.twitter.com/cyK0xHX7tQ

— Niall Ferguson (@nfergus) June 18, 2024

The Group of 7 countries might have set a record when they met in Italy last week. Has there ever been a less popular assemblage of leaders of the free world? Approval ratings ranged from Giorgia Meloni of Italy’s about 40 percent to Emmanuel Macron of France’s 21 percent to Fumio Kishida of Japan’s 13 percent. Last year the Edelman Trust Barometer found that only 20 percent of people in the G7 countries thought that they and their families would be better off in five years. Another Edelman survey, from 2020, uncovered a broad distrust of capitalism in countries across the world, “driven by a growing sense of inequity and unfairness in the system.”

Why the broad dissatisfaction with an economic system that is supposed to offer unsurpassed prosperity? Ruchir Sharma, the chairman of Rockefeller International and a Financial Times columnist, has an answer that boils down to two words: easy money. In an eye-opening new book, “What Went Wrong With Capitalism,” he makes a convincing case.

“When the price of borrowing money is zero,” Sharma told me this week, “the price of everything else goes bonkers.” To take just one example: In 2010, as the era of ultralow and even negative interest rates was getting started, the median sale price for a house in the United States hovered around $220,000. By the start of this year, it was more than $420,000.

Nowhere has inflation (in the broad sense of the term) been more evident than in global financial markets. In 1980 they were worth a total of $12 trillion — equal to the size of the global economy at the time. After the pandemic, Sharma noted, those markets were worth $390 trillion, or around four times the world’s total gross domestic product.

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How Capitalism Went Off the Rails

By Bret Stephens, Opinion Columnist @nytimes

"The social consequence of this is rage; the political consequence is populism."
https://t.co/yD7bmUnqDw

— Stefan Michaelsen (@stefanmichaelse) June 19, 2024

To keep Ukraine’s artillery crews supplied, the Pentagon set a production target last year of 100,000 shells per month by the end of 2025. Factories in Scranton and Wilkes-Barre, Pa., together make about 36,000 shells per month. The new General Dynamics facility in Mesquite, Texas, will make 30,000 each month once it reaches its full capacity.

The 100,000-per-month goal represents a nearly tenfold increase in production from a few years ago.

An Ohio-based defense firm called IMT is expected to make up the difference.

Less than a year ago, the surrounding area here in North Texas was just a dirt field. But with millions of dollars from Congress and help from Repkon, the American defense firm General Dynamics was able to open the factory about 10 months after breaking ground.

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U.S. to build plant in Texas to produce 155mm shells for Ukraine – NYT

This will be the first plant the Pentagon has built from scratch since the war in Ukraine began. The plant will produce 30,000 artillery shells per month, about twice the current US production capacity.… pic.twitter.com/HLb19xfKS1

— Jürgen Nauditt 🇩🇪🇺🇦 (@jurgen_nauditt) May 30, 2024

Hospitals in eight states are at risk of running out of cash after their owner filed for bankruptcy, potentially pitting the chain’s creditors against regulators, who raced to address concerns about safety.

Steward Health Care System became one of the largest hospital bankruptcies in decades when it filed for chapter 11 early Monday. The chain, which operates 30 hospitals, has been in dire financial straits for months, failing to pay bills and burning through emergency loans.

State regulators are worried about Steward, whose physicians provide care for 2.2 million patients a year. In one Steward hospital, bats prompted the evacuation of an intensive-care unit. At others, traveling nurses left after not being paid, and executives have swapped equipment to fill gaps.

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Hospitals in eight states were at risk of running out of cash after their owner, Steward Health Care, filed for bankruptcy https://t.co/QM4tFobLr0 https://t.co/QM4tFobLr0

— The Wall Street Journal (@WSJ) May 6, 2024

The Social Security and Medicare Trustees just released their annual reports on the financial status of the Social Security and Medicare programs. The Trustees project that both the Social Security and Medicare trust funds are within 12 years of insolvency and in need of trust fund solutions. Specifically, they project the Social Security Old Age and Survivors Insurance (OASI) trust fund will run out of reserves in 2033, the Medicare Hospital Insurance (HI) trust fund will become insolvent by 2036, and the Social Security Disability Insurance (SSDI) trust fund will remain solvent over the 75-year projection window. Assuming revenue is reallocated in the years between OASI and SSDI insolvency, the theoretically combined Social Security trust funds will be insolvent by 2035.

In other words, Social Security’s retirement trust fund will reach insolvency when today’s 58-year-olds reach the normal retirement age and today’s youngest retirees turn 71. At that point, all beneficiaries will face a 21 percent across-the-board benefit cut. On theoretically combined basis, all beneficiaries will face a 17 percent cut in 2035. Over the full 75-year projection window, Social Security’s combined funds faces an actuarial imbalance of 3.50 percent of taxable payroll, which is the equivalent of 1.2 percent of Gross Domestic Product (GDP) or 20 percent of all future benefits.

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🚨 ANALYSIS: The latest #Medicare Trustees' projections show:

➤ The HI Trust Fund will run out of reserves in 12 years, and faces a large shortfall;
➤ Total Medicare costs will grow rapidly;
➤ Medicare's outlook has largely improved since last year, but might be far worse… pic.twitter.com/G7fyrvCILX

— CRFB.org (@BudgetHawks) May 7, 2024

It was not so long ago that the hottest topic in American politics was the ballooning national debt. In 1992 Ross Perot had the best showing for a third-party candidate in a presidential election since 1912 on a platform of fiscal probity. Two years later the Republicans seized control of Congress for the first time in 40 years, with the first item in their “Contract with America” being a pledge to balance the budget. Bill Clinton easily won re-election two years after that, in part by negotiating spending cuts with Republicans that led to America’s first surpluses in a generation.

At the start of this fiscal hullabaloo, in 1992, America’s net debt amounted to 46% of gdp. Today it has reached 96% of gdp. For the past five years, under first Donald Trump and then Joe Biden, the federal deficit has averaged 9% of gdp a year. The International Monetary Fund says that America’s borrowing is so vast it is endangering global financial stability. s&p and Fitch, two credit-rating agencies, have already downgraded America’s debt; a third, Moody’s, is threatening to.

Yet concern about deficits and debt has all but vanished from American politics. Voters seem relaxed about the subject, which barely registers in pollsters’ tallies of the biggest problems facing the country. Although Messrs Biden and Trump both tut-tut about the dire fiscal outlook from time to time, neither has made improving it a centrepiece of his campaign. On the contrary, both would in all likelihood add to America’s debts, by spending more in Mr Biden’s case and by taxing less in Mr Trump’s. Neither candidate dares breathe a word about trimming spending on health care and pensions for the elderly, which account for the biggest share of the federal budget and are set to grow still bigger as the population ages. Yet a fiscal reckoning is coming, whether the candidates admit it or not—and given the politicians’ denial, it may take an unexpected form.

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In the 1990s the hottest topic in American politics was the ballooning national debt. In 1992 this amounted to 46% of GDP; today it has reached 96%. Yet Joe Biden and Donald Trump are all but ignoring this https://t.co/S3QseVdONa 👇

— The Economist (@TheEconomist) May 5, 2024

Mark Kelly of Recorded Future, a cyber-security firm, says his company is aware of about 50 hacking groups in China, including private firms working for the mss or People’s Liberation Army. There are undoubtedly many more. Mr Kelly describes China’s cyber-espionage efforts as “orders of magnitude” greater in scale than those mounted by Russia or North Korea.

As the indictment shows, they are surprisingly devolved. Some of them specialise in spying on different parts of the world, says Nigel Inkster, a former deputy head of Britain’s spy agency, mi6. They have considerable leeway to do as they wish, he says: “I’m not even sure that there is any kind of formal political clearance mechanism.” Much of their work is subcontracted to private firms. Last month a huge online dump of documents from one such company, i-Soon, showed its involvement in large-scale cyber-snooping on behalf of a variety of government agencies.

The West’s anxieties, not least about the hackers’ theft of corporate data, are becoming increasingly manifest. In January the head of the fbi, Christopher Wray, said that China’s state-sponsored hackers outnumbered his agency’s cyber-personnel by “at least 50 to one”. He added that China’s hackers are laying the groundwork for a possible Chinese strike, “positioning on American infrastructure in preparation to wreak havoc and cause real-world harm to American citizens and communities.”

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The West’s anxieties about Chinese cyber-espionage are becoming increasingly manifest. But if it hopes that naming, shaming and sanctions will dissuade the spooks, it is likely to be disappointed https://t.co/MnQGij3lds 👇

— The Economist (@TheEconomist) March 27, 2024

The US faces a Liz Truss-style market shock if the government ignores the country’s ballooning federal debt, the head of Congress’s independent fiscal watchdog has warned.

Phillip Swagel, director of the Congressional Budget Office, said the mounting US fiscal burden was on an “unprecedented” trajectory, risking a crisis of the kind that sparked a run on the pound and the collapse of Truss’s government in the UK in 2022.

“The danger, of course, is what the UK faced with former prime minister Truss, where policymakers tried to take an action, and then there’s a market reaction to that action,” Swagel said in an interview with the Financial Times.

The US was “not there yet”, he said, but as higher interest rates raise the cost of paying its creditors to $1tn in 2026, bond markets could “snap back”.

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FT Exclusive: US debt is on an 'unprecedented' trajectory that could lead to a Liz Truss-style market shock, the head of Congress’s independent fiscal watchdog has warned https://t.co/JLiKKeQE9z pic.twitter.com/ljX3OpInL1

— Financial Times (@FT) March 26, 2024

Kali Gaddie was a college senior when the pandemic abruptly upended her life plans—and made her part of a big and deeply unhappy political force that figures to play a huge role in the 2024 election season.

Her graduation was postponed, she was let go from her college job and her summer internship got canceled. She spent the final months of school taking online classes from her parents’ house. “You would think that there’s a plan B or a safety net,” she said. “But there’s actually not.”

Today, Gaddie, 25, works as an office manager in Atlanta earning less than $35,000 a year. In her spare time, she uploads videos to TikTok, where she’s amassed thousands of followers. Now, that’s at risk of being taken away too. All of this has left her dejected and increasingly skeptical of politicians.

Young adults in Generation Z—those born in 1997 or after—have emerged from the pandemic feeling more disillusioned than any living generation before them, according to long-running surveys and interviews with dozens of young people around the country. They worry they’ll never make enough money to attain the security previous generations have achieved, citing their delayed launch into adulthood, an impenetrable housing market and loads of student debt.

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Young adult Gen Z voters are more disillusioned and pessimistic than any before. More here, including charts from *Generations*:https://t.co/bU8xNjCd9j

— Jean Twenge (author of GENERATIONS, iGEN) (@jean_twenge) March 15, 2024

Harvard University economics professor Kenneth Rogoff said both President Joe Biden and his predecessor and challenger Donald Trump risk sending US debt levels into dangerous territory as Washington fails to grasp that the era of ultra-low interest rates won’t come back.

“Washington in general has a very relaxed attitude towards debt that I think they’re going to be sorry about,” Rogoff said on Bloomberg Television’s Wall Street Week with David Westin. “It’s just not the free lunch that Congress and perhaps the two presidential candidates have gotten used to.”

While an exact “upper limit” for the federal debt cannot be known — it’s estimated by the Congressional Budget Office to climb to 116% of US gross domestic product by 2034 from 99% today — Rogoff warned that there will be challenges as the level increases.

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Harvard's Ken Rogoff said both President Joe Biden and challenger Donald Trump risk sending US debt levels into dangerous territory https://t.co/3uWRkNCiXA via @bpolitics

— Robert Burgess (@BobOnMarkets) March 13, 2024

During the next year, the United States faces an increasingly fragile global order strained by accelerating strategic competition among major powers, more intense and unpredictable transnational challenges, and multiple regional conflicts with far-reaching implications. An ambitious but anxious China, a confrontational Russia, some regional powers, such as Iran, and more capable non-state actors are challenging longstanding rules of the international system as well as U.S. primacy within it. Simultaneously, new technologies, fragilities in the public health sector, and environmental changes are more frequent, often have global impact and are harder to forecast…The world that emerges from this tumultuous period will be shaped by whoever offers the most persuasive arguments for how the world should be governed, how societies should be organized, and which systems are most effective at advancing economic growth and providing benefits for more people.

—Read it all.

The Annual Threat Assessment of the US Intelligence Community notes that the Chinese state-owned media targeted American political candidates on TikTok in the 2022 Midterms. Here's our investigation on how these accounts generated tens of million views https://t.co/yqNJHItzE7 pic.twitter.com/QIEhtnFzvQ

— Iain Martin (@_IainMartin) March 12, 2024

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 trillion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

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US national debt is rising at a rate of $1 trillion every 100 days. That is long-term unsustainable. https://t.co/7krjwWFfqL

— Anders Corr, Ph.D. (@anderscorr) March 2, 2024

Spending on safety net programs such as Social Security and Medicare continues to grow even as their trust funds face the prospect of being depleted in the next 10 years.

“Also boosting deficits are two underlying trends: the aging of the population and growth in federal health care costs per beneficiary,” Mr. Swagel said. “Those trends put upward pressure on mandatory spending.”

The national debt is likely to be even larger than the budget office is predicting, as its forecast assumes that the 2017 tax cuts that Republicans enacted will fully expire even though lawmakers are already considering extending many of the measures, including lower individual income tax brackets.

For the second time in less than a year, the budget office said it now expected Mr. Biden’s efforts to wean the nation from fossil fuels to be more popular with the public — and more expensive for taxpayers — than initially estimated.

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New: U.S. Debt on Pace to Top $54 Trillion Over Next 10 Years w/ @jimtankersley https://t.co/VZ9wDWn5l2

— Alan Rappeport (@arappeport) February 7, 2024

Black Swan author Nassim Nicholas Taleb said the US deficit is swelling to a point that it would take a miracle to reverse the damage.

“So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing, that’s the political structure of the political system, eventually you’re going to have a debt spiral,” he said Monday night at an event for Universa Investments, the hedge fund firm he advises. “And a debt spiral is like a death spiral.”

Taleb defined the ballooning debt load as a “white swan,” a risk that’s more probable than a surprise “black swan” event. While he didn’t identify specific outcomes in markets, he did say white swans include both the US deficit and an economy that’s far more vulnerable to shocks than in prior years.

The reason for that, he said, is that the world is far more interconnected due to globalization, with issues in one region able to ricochet around the world.

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Black Swan author Nassim Nicholas Taleb says as long as you have a government continually extending the debt limit and doing deals because they're afraid of the consequences of doing the right thing, then eventually you're going to have a debt spiral. https://t.co/pQFrtVNqus

— Ben Woodward, CFA (@BennettWoodman) January 31, 2024

Schools across the country are preparing to see their budgets shift from flush to strained as billions of pandemic aid runs out in less than a year, putting at risk staffing and programs added with Covid-relief funds.

The 2023-24 school year represents the last full year in which districts can spend down what remains of the $180 billion in federal Covid-19 aid. High-poverty districts typically received more emergency relief, so now face steeper cuts as the money runs out.

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Billions in pandemic education aid runs out in under a year, posing a risk for schools that added staffing and programs with the Covid relief https://t.co/IM6bGBN2Q5

— The Wall Street Journal (@WSJ) October 30, 2023

In a year when the US economy exceeded almost everybody’s expectations, the underlying federal deficit roughly doubled, spotlighting a dire fiscal trajectory likely to only worsen the partisan budget battles in Washington.

The government ran a $2.02 trillion deficit for the fiscal year through September, after adjustments to remove the impact of President Joe Biden’s student-loan forgiveness program, which was scotched by the Supreme Court. The gap is $1.02 trillion more than the prior year.

The surge is a powerful illustration of a fiscal path that’s triggered warnings from economists, politicians and credit rating agencies. It also helps explain why yields on longer-term US Treasuries are reaching highs unseen since before the global financial crisis, with the government needing to issue ever more debt to cover the shortfall of revenues relative to spending. Ten-year yields surpassed 5% on Monday.

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The US government had a $2 trillion budget deficit for the fiscal year through September, a gap that's $1 trillion more than the prior year. https://t.co/M69cTCs6Yl pic.twitter.com/LMOoK3Nxen

— Lisa Abramowicz (@lisaabramowicz1) October 24, 2023

When it comes to the size of the federal government’s annual deficit, appearances can be deceiving.

The gap between spending and revenue for fiscal year 2023, which ended on Sept. 30, was $1.7 trillion, the Congressional Budget Office projected ahead of the official Treasury Department figures. That would be a roughly $300 billion widening in the shortfall from fiscal year 2022.

But the gap was actually much larger. That is because of the odd way President Biden’s attempt to broadly cancel student debt shows up in budget figures.

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The Federal Deficit Is Even Bigger Than It Looks: Student-debt cancellation complicates the numbers as higher interest rates make borrowing costlier https://t.co/UnnEwiCbb6 pic.twitter.com/WqwpDVfUfn

— Jesse Felder (@jessefelder) October 13, 2023

But the biggest consequences will be for the biggest borrower — namely the US government. As Greg Ip put it in Thursday’s Wall Street Journal, “Rising Interest Rates Mean Deficits Finally Matter.” It is no coincidence, he argued, that “the recent rise in bond yields came as Fitch Ratings downgraded its US credit rating, Treasury upped the size of its bond auctions, analysts began revising upward this year’s federal deficit, and Congress nearly shut down parts of the government over a failure to pass spending bills.”

US fiscal policy has long been on an unsustainable trajectory — for more than 20 years, in fact. But under President Joe Biden it has jumped the shark. The federal deficit looks like it will exceed 7% of GDP in fiscal 2023, after the Congressional Budget Office adjusts for the vagaries of policy on student debt forgiveness. That is a truly shocking number for an economy that is running at close to full employment. And, as I pointed out here a month ago, there is no scenario the CBO can devise in which the total debt relative to GDP does not keep growing, with spending driven up partly by the rising burden of interest payments.

The key problem, as Brian Riedl of the Manhattan Institute has pointed out, is that the average maturity of the federal debt is just 76 months. So even if the CBO is right, and long-term interest rates average 4% over the next three decades, the result will still be budget deficits rising to 10% of GDP. And each additional percentage point on interest rates would add an additional $2.8 trillion of debt service costs over 10 years.

This disastrous outcome is a perfect illustration of the law of unintended consequences.

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“In terms of total returns, this is the biggest bond market rout in 150 years.”https://t.co/ufQO76ioX6 via @opinion

— Bruce Mehlman (@bpmehlman) October 10, 2023

It is sobering to think that the US federal government was running a large budget surplus in 2000 and the gross debt ratio was 54pc of GDP.

A quarter of a century later the ratio is 120pc and vaulting past the 1945 peak. This is partly due to two big recessions and Covid, to be sure, but mostly due to three sets of unfunded tax cuts, two unfunded 21st-century wars and no serious effort to control ballooning middle-class entitlements.

David Kelly from JP Morgan says the US is looking at annual fiscal deficits of $2 trillion this year, next year, and as far as the eye can see. This is at a time of effectively full employment and what should be bumper tax revenues. The deficit could hit $3.5 trillion in the next downturn.

The US Treasury must roll over $8 trillion of existing debt and raise $2 trillion of fresh debt this fiscal year, even as the Fed tosses another $1 trillion onto the heap under its QT programme.

Investors have belatedly, and suddenly, woken up to the shocking implications of a structural budget deficit heading for 8pc of GDP even before any trouble starts. It is this that has driven up yields on US Treasuries by 100 basis points since July.

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If rates continue to rise the way that they’ve been rising, eventually there’s going to be a financial accident, eventually something will break, said JP Morgan’s David Lebovitz on Bloomberg Surveillance. https://t.co/ZsQ8NfcD3n must-read. we thank AEP & David Lebovitz @jpmorgan

— tom keene (@tomkeene) October 7, 2023

The unexpected deficit surge, which comes amid signs of strong growth in the economy overall, is likely to shape a fierce debate on Capitol Hill about the nation’s fiscal policies as lawmakers face a potential government shutdown this fall and choices over trillions of dollars in expiring tax cuts. The Senate will return this week from August recess, and the House will be back the following week. Biden and House Speaker Kevin McCarthy (R-Calif.) approved a deal in June to raise the nation’s borrowing limit, but it did little to alter the long-term debt trajectory.

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🇺🇸 U.S. deficit explodes even as economy grows – Washington Posthttps://t.co/IAXBFZ66WK pic.twitter.com/AEnOvk8hVP

— Christophe Barraud🛢🐳 (@C_Barraud) September 4, 2023