US Policy Pulse

Debt $39T; OBBBA adds $3.1T. CBO Monthly Budget Review shows FY 2026 deficit $1.373T through nine months, $35B more than last year; net interest $857B ($24B/week) now exceeds defense spending. Treasury borrowing $153B/month. Tariff refunds from Supreme Court ruling cut June revenues. CRFB calls for 3% of GDP deficit target. Treasury 30-year auction at 5.058% yield with strong international demand but weak domestic participation. CBO: House highway bill widens HTF deficit. McConnell's absence blocks SAVE Act and defense reconciliation; Johnson revives SAVE Act via reconciliation despite parliamentarian block. Capretta analysis shows IRA Part D redesign costing $0.6T more. Pentagon budget debate: $600B increase, 80% unobligated. Mercatus study reframes Social Security delay risk as bond market contagion. GAO reports federal workforce shrank 256,000 in 2025, $41B annual savings barely dents $2T deficit; IRS cuts could worsen tax gap. OBBBA permanently increases Child Tax Credit to $2,200 per child for 2026, with refundable cap at $1,700. Sen. Ron Johnson (R-WI) confirmed as Budget Committee chair after Graham's death, likely pushing deeper spending cuts and entitlement reform in reconciliation. Bond market stress intensifies: 20-year auction softness, Moody's downgrade signals. IRS audit shortfall: wealthy filers audited at half planned rate, refund delays due to staffing losses. 30-year Treasury yield still 5.06%, 30-year TIPS yield highest since 2010 reintroduction, yield curve pricing in rate hikes. House Budget Committee advances FY2027 budget resolution on party lines, unlocking reconciliation for $95B new spending; CRFB estimates $130B debt increase with interest. Treasury's heavy reliance on short-term T-bills (85% of issuance) means 20% of debt matures in 4 months, 33% in a year; hawkish Fed signals rate hikes could spike short-term yields. 10yr yield at 4.6% (45bp above CBO), 30yr above 5.1%. CBO investigating healthcare fraud savings for Iran war request. CMS 2027 outpatient rule targets hospital pricing (site-neutral imaging, 340B cuts). Rick Scott warns of pre-2008 bond market signals. Vought pitches SAVE Act reconciliation to House GOP; GOP floats fourth reconciliation bill. Treasury flags $99M in payments to deceased via death-master-file. AHA comments on Medicaid SDP rule project $510B cut. Tariffs cost average household $1,600/year, hitting retirees hardest. House adopts $95B budget framework; Senate resistance from Thune; Chip Roy votes yes despite concerns. New: Thune faces Trump pressure but prioritizes funding bill over reconciliation 3.0; SAVE Act stalls as McConnell absent; Senate path uncertain. House adopts $95B Iran war budget via reconciliation, 216-214. Reconciliation 3.0 faces uphill battle; Johnson admits 'very small needle to thread'. Mounting deficit complicates Fed rate choices.