Hey there, and welcome to Two to the Fifth, ten minutes for people who think breaking news should have to clear a higher bar than “this happened eleven minutes ago.”
We look at five timeframes: the last 24 hours, the last week, the last month, the last year and the last decade. Two minutes each. Five pours. One country. No chaser.
This week, the federal deficit, and what it actually means. Not because I’ve suddenly developed an unhealthy admiration for spreadsheets, but because buried inside a bunch of numbers measured in trillions is a fairly simple question: how long can you keep spending more than you make, and what actually happens if you don’t stop?
It’s a recipe for disaster on a personal level, so let’s spend some time looking at how it’s working out for our government and whether it’s time to do better. Decide for yourself, but first gimme 10 minutes.
This is Two to the Fifth.
Section I: The Past 24 Hours
The Summit That Wasn’t
Three days ago, Vladimir Putin floated a summit with Donald Trump and Xi Jinping to discuss ending the war in Ukraine. Ukraine wasn’t invited. Neither, apparently, was Europe. I was ready to talk about how remarkably old-fashioned that sounded - three powerful countries sitting around deciding what happens to somebody else’s country.
Then the story changed. Today, Ukrainian President Volodymyr Zelensky said he supports trilateral talks among Ukraine, Russia and the United States. U.S. intelligence sharing with Ukraine has resumed, and the three-strongmen summit has quietly faded from view.
Meanwhile, the Wall Street Journal reported that Elon Musk personally ordered restrictions on military Starlink being used by Ukraine. Secretary of State Marco Rubio says the decision was Musk’s, not the U.S. government’s. Exactly who knew what, and when, remains murky.
All of which makes this a perfect 2⁵ story. Monday’s new world order apparently had the shelf life of room-temperature yogurt.
France Has Run Out Of Easy Answers
France spent much of the last week watching students protest deteriorating schools and public services, sometimes violently. Their demand is understandable: fix the schools, spend what it takes.
Except France is already deeply in debt, running large deficits and struggling to pass a budget. Today its 10-year government bond yield hit 5 percent, the highest since 2002, as investors demanded higher interest if they’re going to loan the country money.
The needs don’t disappear. The promises don’t disappear. But eventually the ability to borrow cheaply can. Keep France in mind, because this week America closed its books too.
Section II: The Past Week
Uncle Sam Is Living Off His Credit Card. That Always Ends Well.
For Fiscal Year 2026, the U.S. reported about $7.4 trillion in spending and $5.4 trillion in revenue. I’m no math wizard, but that sounds like we came up roughly $2 trillion short. More than 2/3 of that amount, about $1.36 trillion went to pay interest on our debt. Wait, what?
Before we go any farther, three words get thrown around in this conversation a lot, and we don’t often stop to make sure we’re clear on exactly what they mean. The deficit is how much more the government spends than it brings in – in a single year. This year, $2 Trillion. The debt is what we’ve accumulated by doing that over and over again. That number just topped $40 trillion. And interest is what we pay because the US borrows the money to cover the debt, usually in the form of Treasury Bonds. The interest rate on our debt? Around 3-1/2%, on average. Multiply the $40 Trillion by that average interest rate, and you get the $1 trillion 360 Billion Dollars that we spent on interest in 2026. I’m oversimplifying a bit, but you get the idea.
What does it mean? Pretend you made $100,000, spent $137,000, and borrowed the other $37,000. Do that once because the roof blew off, okay. Do it every year, and eventually the interest becomes one of your biggest expenses.
The federal government is not literally a household. It issues the world’s preferred currency and can tax future economic activity, and unlike you, does not eventually retire and take up pickleball. But the arithmetic remains stubborn.
The Congressional Budget Office projects deficits of at least 5.6 percent of GDP every year through 2036, almost 50 percent above the average of the past 50 years. When we’ve run deficits like this in the past, it was usually because unemployment was 15 percent or we were, you know, fighting World War II. We’re slowly turning this into business as usual.
Meanwhile, One Time When More Dodos Is A Good Thing
While Washington works on making another $2 trillion disappear, somebody else is working on making the actual dodo reappear.
A biotech company called Colossal says it has reconstructed about 95 percent of the dodo genome and hopes eventually to create something remarkably close to a living dodo, and bring it back in Mauritius, where they went extinct centuries ago.
Section III: The Past Month
How Much Debt Is Too Much?
The federal debt is now roughly the size of the entire American economy. Is that automatically catastrophic? Amazingly, no.
In 1946, after World War II, it was about 106 percent of GDP. Then the economy grew much faster than the debt, so even without paying the debt off, the burden shrank dramatically relative to our ability to support it.
That’s the useful question: not simply “how much do we owe?” but whether debt is growing faster than the economy. Right now, CBO says we stay on the current path and debt reaches about 120 percent of GDP by 2036 and 175 percent by 2056.
Countries can handle debt. In fact, most countries sing for their supper. We don’t need to pay off the national debt. We do need to stop letting it outrun us.
And there are ways to improve the math without simply taking things away from people. Last month, every state, plus Washington D.C. and Puerto Rico, applied to join a Medicaid program designed to buy certain prescription drugs at prices closer to what other developed countries pay. The government estimates savings of about $64 billion over ten years.
That won’t solve a $2 trillion deficit. But the idea matters: cutting healthcare spending doesn’t necessarily mean cutting healthcare. Sometimes it means paying less for the same drug.
Speaking of Singing, Lemurs Perform La Bohème
Scientists studying indris in Madagascar found that these singing lemurs widen their mouths as their pitch rises, using essentially the same acoustic trick sopranos use to make high notes carry to send their messages through dense rainforest.
It may not be Aida, but their audience seems to be paying attention.
Section IV: The Past Year
Paying the Minimum Balance: It’s the American Way
Here’s where debt stops being theoretical: interest.
We spent about $1.36 trillion servicing federal debt last year - more than we spent on defense. And that money doesn’t buy a bridge, pay a teacher, buy an aircraft carrier, fund Medicare or send a Social Security check. It just pays for things we already bought.
CBO projects that by 2036, annual net interest payments will approach $2.1 trillion, almost as much as all federal discretionary spending combined.
And the loop feeds itself. We run a deficit, borrow to cover it, more debt means more interest, more interest means a bigger deficit, which requires more borrowing.
Interest rates matter too. CBO asked what happens if average federal borrowing rates run just one percentage point higher than expected over the next 30 years. Instead of debt reaching 175 percent of GDP in 2056, it reaches 222 percent. Ouch.
One percentage point. That’s why France is a bit of a warning for us. Investors don’t need to stop lending you money for things to get painful. They just need to start charging more interest .
Let’s take a snack break.
The Milky Way Tastes Like A Milky Way
The Milky Way, it turns out, contains sugar. Astronomers this year found erythrulose, a kind of sugar also found in raspberries, floating in a cloud of gas and dust near the center of our galaxy. It isn’t itself a building block of life, but it can transform into molecules relevant to life’s chemistry, evidence that surprisingly complicated organic chemistry was underway in space long before we got here.
Mars bars, your move.
Section V: The Last Decade
Okay, So This Is Bad. Can We Fix It?
So let’s talk about solutions, starting with human scale numbers . Say you’re seriously in debt and next year decide to spend $10,000 less and earn $10,000 more. Not easy, but not unimaginable either. Keep the car longer, scale back a vacation, go after a promotion or pick up a side gig.
Now apply that principle to Washington. Cut federal program spending about 10 percent and increase revenue about 10 percent, and today’s roughly $2 trillion deficit falls by more than half, to around $850 billion. The debt still grows, but much more slowly, and over time we save hundreds of billions in interest we’d otherwise pay.
So what might 10 percent less spending and 10 percent more revenue actually look like?
Start with healthcare. Americans spend about $14,800 per person per year. Comparable wealthy countries spend about $7,900. If our costs somehow fell all the way to their average, Americans collectively would spend something like $2.3 trillion less every year. That isn’t all federal money, but it tells you the scale of the opportunity. We don’t necessarily need less healthcare. As we just saw with Medicaid, one place to start is paying closer to what other countries pay.
Defense is another place. The United States spent about $954 billion on the military last year, roughly a third of all military spending in the world. We have global responsibilities most countries don’t, but trimming military spending by even half a percentage point of GDP would save roughly $150 billion a year. We could get there by paying less for weapons that routinely arrive late and over budget. Again, cutting defense spending does not automatically mean cutting defense capability.
Then there’s the revenue side – y’know, taxes. The federal government will give up about $2.6 trillion this year through tax deductions, exclusions, credits and preferential rates – what they call “tax expenditures”. We don’t need to eliminate them. But trimming them by 20 percent, before accounting for changes in behavior, gets you roughly another half trillion dollars.
Healthcare prices. Defense costs. Tax breaks. You can disagree with every one of those choices, but the larger point is that the money exists. Changes measured in hundreds of billions get you surprisingly quickly toward the trillion-dollar improvement we talked about earlier.
So why don’t we do it?
Because the benefit is spread among millions of people, while the loss is concentrated. Saving $500 or $1,000 a year might matter a lot to you, but probably not enough to hire a lobbyist. Losing $20 billion matters enough to an industry to do exactly that.
The same thing happens with defense. Saving taxpayers $150 billion is an abstraction. Closing a factory employing 4,000 people is not. The company knows. The workers know. The member of Congress definitely knows.
That’s the imbalance. The benefit of fixing the debt - lower interest, more room for the next recession or war, less borrowing left to the next generation - is diffuse. The pain lands on specific people and companies right now.
And those interests have tools ordinary taxpayers usually don’t: lobbyists, trade associations, campaign contributions and political advertising. Super PACs can accept unlimited contributions from individuals, corporations and unions as long as their spending remains legally independent of candidates.
That doesn’t mean lobbying is inherently corrupt. Hospitals should be able to explain what a Medicare cut would do. Defense workers should be able to defend their jobs. Everybody gets to make their case.
But voters can also ask for guardrails: stronger disclosure of who is financing political spending, tougher enforcement of the separation between Super PACs and candidates, longer cooling-off periods before government officials are allowed to become lobbyists, and better disclosure of who lobbyists are meeting and what they want.
Maybe fixing the federal budget isn’t primarily a question of whether we can find enough money. We just found plenty of it. The harder question is how our political system can make better choices when the benefit belongs to everybody and the cost belongs to somebody powerful enough to fight back.
So that’s this week’s Two to the Fifth. Thanks for joining us. Now get out of here. Drink responsibly. Pay down the credit card.
And remember: The news is not what happened today. The news is what today proves is still happening.