The Government Spends About $5.5 Billion a Day More Than It Takes In. The Debt Has Doubled in 10 Years. Jaime Dimon This the Situation Could Get Much Worse.
Washington borrows over a trillion dollars a year just to pay interest on what it already owes, and two of Wall Street's most powerful executives are warning the pressure on bond markets has not yet reached its peak.
Every day, Washington spends about $5.5 billion more than it collects. Over fiscal 2026, which ended Sept. 30, the gap added up to a $1.992 trillion deficit. BigGo Finance reported that figure was up 12% from the prior year. The deficit is one year’s shortfall. The debt is the running total of every shortfall, and it has grown large enough that its interest bill now drives more borrowing. Retirees holding long-dated bond funds are already paying for it through price losses.
Charlie Bilello of Creative Planning laid out the decade on X:
Bilello wrote: “Over the last 10 years, US Federal Government Tax Revenue has increased 65% to $5.4 Trillion while Government Spending has increased 92% to $7.4 Trillion.” “The result: a more than doubling of the US National Debt from $19.8 trillion to $40.4 trillion.”
A Debt That Doubled in a Decade
Federal Reserve data show total public debt reached $39.46 trillion in the second quarter of 2026, 1.98 times the $19.98 trillion recorded at the end of 2016. That is about a doubling, and Bilello’s more recent count shows it has now passed that mark. Debt equals 121.2% of the economy’s output (gross domestic product, or GDP), up from 104.6% a decade earlier.
The interest bill makes the problem worse. Federal interest payments ran at an annualized pace of about $1.28 trillion in the second quarter. Washington borrows to cover that interest, which adds to the debt and raises next year’s interest bill. The deficit was already 5.77% of GDP in fiscal 2025, a large figure for a period with no recession or war.
Why Your Bond Fund Is Paying the Bill
A yield is the annual income a bond pays relative to its price. When Treasury issues heavy amounts of debt to fund deficits, buyers can demand more compensation, which pushes yields up. Inflation and Fed policy matter too. Goldman Sachs (NYSE:GS | GS Price Prediction) CEO David Solomon noted the Fed raised rates in September “for the first time in 3 years”. Per BigGo Finance, the 10-year Treasury yield was at 5.12% on Oct. 20, up from 3.98% a year earlier, after reaching 5.31% on Oct. 5. The 30-year closed at 5.42% after touching 5.67% on Oct. 7.
Bond prices move opposite to yields. Duration measures how sharply a bond fund’s price responds, and longer maturities responds the most. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) trades at $80.32. Its price is down 8.19% over one year and 32.62% over five. The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF), at $90.40, is down 3.59% over a year. The short-term iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY), at $81.34, is up 1.45% and keeps collecting income. These are price returns only.
Wall Street Profits and Worries at Once
The firms that handle this debt are booming. BlackRock (NYSE:BLK) took in $78 billion of fixed-income inflows last quarter. Goldman and JPMorgan Chase are primary dealers that underwrite Treasury auctions. BlackRock CEO Larry Fink said the debt that took 232 years to reach $8 trillion is now $40 trillion. He expects “structurally higher interest rates for longer, especially out the curve.” Asked about a 6% 10-year yield, Jamie Dimon said, “I would never take it off the table.”
The pressure is global. The International Monetary Fund said global public debt is approaching 100% of GDP and urged the U.S. to cut its deficits amid bond-market strains.
What Retirees Should Track Next
Keep an eye on demand at Treasury auctions, the monthly deficit reports and whether the 10-year breaks its October high. New bonds now pay more income than they did a year ago. If yields rise toward Dimon’s 6%, long-dated funds like TLT will lose more price value. Short-term funds will keep paying their income with little price damage. For retirees, a bond decline in the first years of withdrawals does more lasting damage than one later on, the sequence-of-returns problem we walked through in a free guide on defending the first five years of retirement.
Contact [email protected] for any questions or corrections.
Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
