Why The Deficit Is Shrinking Despite Higher Rates

The National Debt Podcast with Fexingo: Treasury, Borrowing, and Long-Term Fiscal Outlook · Sep 10, 2026 · 7m · transcript

The federal deficit shrank to minus 1.77 trillion dollars in September 2025, even as the ten-year Treasury yield climbed to 4.83 percent and debt service costs rose. Lucas and Luna unpack why shrinking deficits don't always mean a healthier fiscal trajectory, focusing on the structural shift from discretionary spending to mandatory obligations. They explore how rising interest payments are quietly crowding out investment while political gridlock prevents meaningful revenue reform, leaving the twelve point two six percent of GDP debt-to-GDP ratio as a ticking clock for long-term bond…