TRILLIONS National Weekly - Feb. 11, 2026
CBO Releases Budget & Economic Outlook Showing Worsening Deficits; DHS Shutdown Likely Friday midnight; Insider’s Report on Major Developments
Beginning with today’s issue, we have added a new feature: Insider’s Report: What Mass Media Hasn’t Fully Explained This Week.
In addition, our website, TrillionsWeekly.com now includes an extensive library of President’s Budgets; federal spending, tax, debt limit, and budget legislation; and OMB and CBO PAYGO and Sequester reports.
Take advantage of our FEBRUARY DISCOUNT and continue your access to Trillions National Weekly and our newly expanded website for only $40/year.
Prefer to listen to this newsletter? Download the substack app now to listen:
(1) Today’s CBO Budget and Economic Outlook: 2026 to 2036: Increasing deficits and debt due to last year’s OBBBA budget law, and increasing spending on Interest Payments, Medicare, Social Security, and Mass Deportation.
Key takeaways from today’s report:
1. Deficits were already on a dangerous trajectory one year ago; now they are projected to be $1.4 trillion (6 percent) higher over the next 10 years. Here’s why:
The Administration’s actions to reduce immigration are projected to increase deficits by $500 billion over 10 years due to a decrease in the number of people paying taxes and the economic effects of the U.S. population declining by over 5 million people.
Last summer’s budget law (OBBBA) had the net effect of increasing deficits by $4.7 trillion over 10 years due to large tax cuts and spending increases (for immigrant deportation and national defense)—partially offset by Medicaid, SNAP, and student financial aid cuts.
CBO estimates that OBBBA’s deficit impact is partially offset by $3.0 trillion in higher tariff tax revenues over the next 10 years.
However, Trillions Weekly projects that tariff revenues will be less than CBO projects due to the potential outcome of court challenges to the President’s tariff actions, and President Trump’s pattern of reducing high tariff rates when encountering pushback from trading partners and domestic economic sectors. Therefore, there will be less of an offset to the damaging deficit increases in OBBBA and CBO’s estimated 6 percent increase in deficits since last year’s annual report may well be higher.
2. Annual Budget Deficit is projected to grow from nearly $1.8 trillion in FY 2025 to $1.85 trillion this year and is projected to be more than $3 trillion in FY 2036.
3. Debt-held-by-the-public is estimated to increase dramatically from $32 trillion in FY 2026 to $56 trillion in FY 2036 as reflected in CBO’s above graphic.
4. Annual interest payments on the public debt are projected by CBO to more than double from $1 trillion in FY 2026 to $2.1 trillion in FY 2036. By that year, interest payments will account for 19% of all federal spending—and consume the equivalent of 50% of individual income tax revenues.
5. The Social Security Trust Funds are estimated to have insufficient funds to pay full benefits beginning in FY 2032, according to CBO. At that time, benefit payments would have to be reduced an average of 28% or Congress would have to cover the shortfall from general tax revenues.
The better option is to reform the program now (increasing revenues and slowing the growth of benefits) to ensure long-term solvency. The longer politicians wait to do this, the more painful the reforms will be.
6. Link to our TrillionsWeekly.com Budget Overview for pie charts that break down Federal Spending by Category and Federal Revenues by Source.
7. What is driving the unsustainable growth in the public debt?
Rapidly Growing Interest Payments: Because of the rapidly escalating accumulated public debt, and interest rates above the last decades lows, annual interest payments on the debt have increased as a percentage of GDP (Gross Domestic Product) from an average of 2.1% over the last 50 years to 3.3% in FY 2026 and a projected 4.6% of GDP in FY 2036.
Entitlement spending growth due to aging of the population and rising healthcare costs and utilization:
Medicare spending increased from 2.1% of GDP in FY 2000 to 3.3% in FY 2026 and is projected to reach 4.2% of GDP in FY 2036 (a stunning growth in outlays of 88% over the next 10 years); and
Social Security increased from 2.0% of GDP in FY 2000 to 5.2% in FY 2026 and is projected to reach 5.9% of GDP in FY 2036 (a projected growth in outlays of 65% over the next 10 years).
In dollar terms, outlays for Medicare and Social Security are each projected to increase by more than $1 trillion over the next 10 years.
Revenues have not kept pace with spending due to tax cuts: revenues have fallen as a percentage of GDP from 20% in FY 2000 (when the budget was in surplus) to 17.5% in FY 2026 as a result of major tax cuts during the Bush-43, Trump-45, and Trump-47 Administrations.
8. Defense: While defense spending is not currently a driver of deficit increases, if President Trump succeeds in boosting the annual defense budget by 50% in FY 2027—from $1 trillion to $1.5 trillion—the public debt will be further exacerbated.
9. Non-Defense Discretionary (NDD) spending programs are not responsible for the ballooning public debt. In fact, NDD programs have fallen as a percentage of GDP from 3.9% of GDP in FY 2021, to 3.6% in FY 2022, 3.3% in FY 2023, 3.2% in FY 2025, 3.1% in FY2026, and are projected to be only 2.4% in FY 2036.
The 11 non-defense discretionary appropriation bills fund a multitude of government programs including veterans’ healthcare, low-income housing assistance, highways, disaster relief, medical research, schools and vocational education, airports & air traffic control, NASA, science and research, law enforcement, family services, special education, public health, low-income home energy assistance, food and drug inspection, water projects, environmental protection, and national parks. The funding for these NDD programs are not driving up deficits.
(2) INSIDER’S REPORT: What Mass Media Hasn’t Fully Explained This Week
1. The likely shutdown of the Department of Homeland Security this Friday night at midnight will not impact ICE or CBP (Immigration & Customs Enforcement and Customs & Border Protection) because those agencies were provided generous multiyear funding in last summer’s massive budget bill (OBBBA). However, the shutdown will negatively impact disaster assistance, airport security, cybersecurity, and the Coast Guard—which are funded by DHS appropriations.
2. TrumpRx does little that is new: it displays discounts already available from drug manufacturers and GoodRx. (In fact GoodRx says it is a “key integration partner” for TrumpRx.
3. You’ve probably seen media stories in recent days about Congress “restoring” President Trump’s budget cuts in the 5-bill appropriations package that became law last week. Hold your applause. President Trump’s budget chief Russell Vought asserts the President has unlimited authority to “impound” – not spend—congressionally appropriated funds; and the Supreme Court has dodged ruling on the issue. Consequently, we don’t really know how much of the appropriated funds will actually be made available by the Trump Administration.
4. The Bipartisan Successes of Lee Hamilton: You may have heard about the passing of Rep. Lee Hamilton, a former committee chair in the House and co-leader of the 9/11 Commission. That Commission, co-chaired by former Gov. Tom Kean, remains an outstanding bipartisan model for addressing the U.S. debt crisis, and rebuilding the strict separation of the political branches from the administration of justice—both of which must happen soon if we are to remain an economically strong democracy.
5. Below, we report on the “decoupling” of the U.S. and Chinese economies. This of course has enormous consequences for both economies, but what does it mean for strategic stability? If you believe that global economic interdependence through international trade reduces the chances of military conflict, this economic “decoupling” could be a dangerous path.
6. The Firing of one-third of Washington Post employees: In the wake of the Washington Post firing one-third of its staff last week, some of you may feel inclined to cancel your subscription to the Post. I share your frustration, but please do not cancel your Post subscription. The national news staff at the Post remains intact and it is vital that we continue supporting them. We have too few remaining sources of fact-based, in-depth reporting on national news. While you may disagree with recent editorial decisions at the Post, the daily in-depth reporting of national news by Washington Post reporters remains solid and objective. The editorial staff can be rebuilt later, but not if the paper disappears entirely. Please keep your subscriptions and stand with the national news reporters who remain at the Washington Post for the sake of a free press and our democracy. Please share this!
(3) HOMELAND SECURITY DEPT. LIKELY TO SHUTDOWN FRIDAY MIDNIGHT
Each year Congress has 12 annual sending bills to enact. Three were enacted on November 12, 2025; another three on January 23, 2026; and five more last week on February 3, 2026 ending a brief 4-day shutdown. For details see our Appropriations Status Chart.
However, the last of the 12 bills—Homeland Security—has not been enacted due to Democrats’ concerns about the conduct of ICE and CBP officers during the Trump Administration’s massive immigrant deportation operation (Immigration & Customs Enforcement and Customs & Border Protection are both part of the Department of Homeland Security, DHS).
DHS is currently operating under a two-week temporary funding resolution which expires this Friday, February 13, at midnight. The temporary funding for DHS was enacted in order to give Republicans and Democrats an opportunity to negotiate a final DHS funding bill.
If DHS runs out of funding Friday night, the shutdown will impact FEMA (which distributes federal disaster aid), TSA (which provides security at the nation’s airports), the U.S. Coast Guard, CISA (the Cybersecurity and Infrastructure Agency), and High-Risk Nonprofit Security Grants.
DHS can designate certain employees as “excepted” from the shutdown—requiring them to work without pay, and with no assurance of back pay. (The Office of Personnel Management last week removed from shutdown guidance previous language guaranteeing back pay.)
Ironically, the agencies that are at issue in the negotiations – ICE and CBP – will continue operations unimpeded due to generous multiyear funding for deportation operations provided in last summer’s budget reconciliation bill (OBBBA).
Negotiations to avoid a shutdown are not going well:
Last Wednesday, Democratic leaders Chuck Schumer (D-NY) and Hakeem Jeffries (D-NY-08) sent a letter to House Speaker Mike Johnson (R-LA-04) and Senate Majority Leader John Thune (R-SD) laying out 10 “guardrails” to “rein in ICE and ensure no more lives are lost.” These include: judicial warrants; no masks; officers to display ID; no enforcement at hospitals, churches, schools and other sensitive locations; no racial profiling; reasonable use of force standards; state and local coordination; immediate access to attorneys; body cameras; and no paramilitary equipment.
Senator Katie Britt (R-AL), Chair of the Homeland Security Appropriations Subcommittee called the proposals “ridiculous.” White House Press Secretary Karoline Leavitt said the Administration is “willing to discuss” some of the proposals, but “others don’t seem like they are grounded in any common sense, and they are nonstarters for this administration.” Republicans have generally opposed a mask ban and requiring judicial warrants (on top of administrative warrants).
Note: The Supreme Court has not yet settled whether administrative warrants are sufficient to enter a person’s home. Read more on this issue.
Over the weekend, the White House submitted a counterproposal to the list of Democratic demands, but it reportedly called only for a nonbinding expansion of body cameras for immigration agents rather than statutory limits.
Democrats responded in a statement Monday night that the White House counterproposal “included neither details nor legislative text” and was “incomplete and insufficient in terms of addressing the concerns Americans have about ICE’s lawless conduct… Democrats await additional detail and text.”
On Tuesday, Majority Leader Thune said there is still time before Friday to reach a deal, but took a procedural step to set up a Thursday vote on another temporary funding resolution for DHS. However, House Democratic Leader Jeffries said unless Republicans agree to “dramatic reform of DHS, ICE, CBP and the way in which immigration enforcement is undertaken,” a shutdown of DHS seems likely which would be “very unfortunate.” Jeffries also threw cold water on the possibility of another short-term funding patch saying, “Were we to agree to a continuing resolution, in the absence of good faith negotiation, that’s just a delay and a stall tactic by this administration.”
On Wednesday, Senator Schumer said Democrats would block another CR (temporary funding measure) because Republicans haven’t done enough to meet their demands for reforms to ICE.
At this point, a shutdown of DHS Friday at midnight seems nearly certain. Check for unfolding appropriations developments at TrillionsWeekly.com, or type into your browser Appropriations.com for direct access to appropriations and shutdown news.
(4) THE ECONOMY, TRADE, TARIFFS, AND THE DOLLAR
“AMERICAN AND CHINESE ECONOMIES ARE HURTLING TOWARD A MESSY DIVORCE”: In an in-depth analysis, the Wall Street Journal reported last week that “China’s leaders have determined that disentangling the two economies—often called ‘decoupling’ or ‘derisking’—is inevitable. The shift fulfills a longstanding Chinese ambition to no longer be a junior partner to the West. It’s a break with decades of Beijing’s orthodoxy that China’s economic success depended on selling low-cost goods to American consumers and building its technological might with U.S. money and know-how… Neither side wants to end all trade between the two economies. But fierce rivalry with the U.S. is now the primary driver of China’s economic strategy, and Xi Jinping is determined to come out on top.”
MASS DEPORTATIONS HURT THE ECONOMY: It should have been obvious that mass deportation of millions of workers would hurt the U.S. economy. Florida and Texas are beginning to face this reality as reported by the Wall Street Journal.
ARE U.S. TREASURIES IN TROUBLE? The U.S. finances its massive annual budget deficits by issuing Treasuries. When the second largest foreign holder of U.S. Treasuries—China—advises its financial institutions to rein in their holdings of Treasuries, we should take careful notice. Read more from Bloomberg.
MIDDLE POWER TRADE AGREEMENTS: A Wall Street Journal analysis reports that “squeezed by U.S. and China, the World’s Middle Powers are Teaming Up…Nations are increasingly seeking to bypass the bigger players on trade, supply chains and security.” The analysis focuses on Canada, Europe, Japan, South Korea, Australia, India, Brazil, and Turkey—noting that “large parts of the world outside of the U.S. and China are still signing trade deals.”
THE AI SURGE: The Wall Street Journal reports that tech giants are spending “more on the AI push than America did on the Apollo space program or the interstate highway system”; the Washington Post reports that the AI boom is so enormous it’s “causing shortages everywhere else”; Politico reports on political opposition to data centers “when one shows up in your backyard”; and the Economist reports on a social network accessible only to AI agents—no humans allowed.
THE FALLING DOLLAR: The Economist explains that we are living in “the age of a treacherous, falling dollar” and “those holding American assets will have to get used to it.” Here’s why.
GOVERNMENT STAKES IN PRIVATE COMPANIES: Worth a read is last week’s editorial from the Wall Street Journal cautioning that government stakes in private companies, in order to boost rare earth production, is the wrong way to beat China.
(5) MAJOR NATIONAL DEVELOPMENTS
BAN ON AGENCY RIFs EXPIRES FRIDAY: Funding for the Department of Homeland Security isn’t the only thing expiring this Friday. A ban on agency RIFs (reductions in force) expires when the funding patch for DHS expires. Read more.
ARMED SERVICES COMMITTEES WANT ANOTHER BUDGET RECONCILIATION BILL to advance President Trump’s requested $500 billion (50 percent) increase in the defense budget. This would continue the perverse use of the filibuster-proof budget mechanism to increase budget deficits. Read more.
Trillions Weekly: Between 1980 and 2000, budget reconciliation was used to reduce budget deficits—ultimately leading to four consecutive budget surpluses. However, beginning in 2001, reconciliation has been used by both political parties as a procedural shortcut to cut taxes and increase spending—contributing to today’s massive public debt.
TRUMP ADMINISTRATION IS SURGING THE USE OF AI in GOVERNMENT: The Washington Post reports “the White House is accelerating AI adoption across government, embedding the technology in policing, health care, defense and science.” This is a reversal of Biden Administration policy which was to approach the use of AI with caution, particularly where people’s rights or safety are concerned. For example, a faulty AI facial recognition tool could lead to someone being wrongfully placed on a watch list or being arrested. The White House Office of Management and Budget is stoking the AI surge by requiring routine reporting of AI use by each agency. The Post has made available the full list of almost 3,000 AI uses disclosed by 29 agencies.
TRUMP’S PROPOSED BAN ON LARGE INSTITUTIONAL INVESTORS IN THE SINGLE FAMILY HOUSING MARKET has hit a wall in Congress. Here’s why.
LAST WEEK SENATE NEGOTIATORS SAID BIPARTISAN TALKS TO RESTORE ENHANCED OBAMACARE SUBSIDIES were likely dead. Read more.
WIPING OUT U.S. CLIMATE REGULATIONS: The New York Times reports that a group of conservative activists has worked for 16 years to stop all government efforts to fight climate change, and they are now “near total victory.”
(6) MAJOR INTERNATIONAL DEVELOPMENTS
NEW NUCLEAR ARMS RACE? With the expiration of the New START Treaty’s limits on U.S. and Soviet nuclear forces, and China’s growing nuclear arsenal, we could be at the beginning of a new, unfettered, and extremely dangerous nuclear arms race. Read more from Fareed Zakaria on the “slow collapse of nuclear stability.”
TAIWAN: The island nation’s top tariff negotiator said it would be “impossible” to move 40 percent of Taiwan’s semiconductor manufacturing capacity to the United States, in response to recent comments by U.S. officials calling for a major production shift. The U.S. pressure tactics come in the wake of U.S. manufacturing jobs falling during the first year of the second Trump Administration.
Speaking engagements and press interviews can be scheduled by calling: (301) 509-5688. Email comments, suggestions, and questions to: info@capitolpublicpolicy.com.
About the author: Charles S. Konigsberg served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee, where he had principal responsibility for managing federal budget and debt limit legislation; Minority Chief Counsel at the U.S. Senate Rules & Administration Committee where he advised the ranking member on budget, appropriations, trade, and tax legislation; Staff Attorney at the U.S. Senate Budget Committee where he had responsibility for federal fiscal law issues including the Impoundment Control Act and drafted the first explanation of the congressional budget process; Director of Congressional Affairs at the Consumer Financial Protection Bureau and AmeriCorps; and staff director of a national bipartisan budget task force.
Charles S. Konigsberg is also author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. Click here to purchase.
This is such a fabulous digest of info. Thx Chuck!