Self-evidently, the news has been overwhelmingly focused on Washington’s current endeavor to unload $200 billion of imperial destruction upon Iran and its neighbors around the Persian Gulf. Well, and also upon all other users of petroleum products, LNG, LPGs, nitrogen fertilizer, food, helium, semiconductors, manufactured goods and most everything else anywhere on the planet.
Accordingly, comparatively scant attention has been given to another recent milestone on America’s headlong dash to fiscal disaster. To wit, the public debt crossed the $39 trillion mark and nearly in the blink of an eye, too. Just four years ago, we were at the $29 trillion level and nine years ago at the $19 trillion mark.
Needless to say, the “peacemaker” in the Oval Office has played no small role in this skyward ascent of the public debt. During his first term, the public debt grew by a staggering $8 trillion and already another $3 trillion has been racked-up during his second go-round.
Stated differently, the King of Debt has surely earned his place in the history books. The $11 trillion of new debt on his watch to date already accounts for 28% of all the public debt incurred in America since George Washington!
Then again, he still has got nearly three years to go, and the debt impact of both the OBBBA and the impending financial and human bloodbath in the Persian Gulf are just getting started.
Indeed, as to the latter it’s as clear as the orange glow around his cranium that the Donald is doing another round of fake rope-a-dope negotiations with the Iranians. That’s to buy time to get the 82nd Airborne, various amphibious landing ships and other invasionary forces in place for his next “win”.
That’s right.The fool in the Oval Office is actually going to attempt to seize the Alamo Kharg Island. That will mean military chaos in the Gulf, unprecedented turmoil in the global economy and soaring military expenditures, which will make the pending $200 billion DOD supplemental look like a mere down-payment.
With respect to the latest round of Rope-A-Dope-With-Donald, the always astute Shanaka Anslem Perera noted this AM:
The 15-point plan was never a negotiating document. It was a pressure document:
- Zero enrichment contradicts NPT Article IV.
- Full HEU surrender contradicts 20 years of centrifuge investment.
- Proxy cut-offs contradict the IRGC’s regional architecture.
- Missile restrictions contradict the only conventional deterrent Iran has left after 25 days of decapitation.
The plan asks Iran to dismantle every strategic pillar simultaneously while receiving revocable phased relief. No government in history has accepted such terms without military occupation.
Iran knows this. The US knows Iran knows this. The plan exists not to be accepted but to be rejected, so that the rejection justifies the next phase of strikes, the pause expiry, and the eventual escalation to power-plant targeting that Trump threatened and temporarily paused on March 23. The rejection is the plan.
Meanwhile, down in the weeds of the budgetary figures for FY 2026 through February, we already have warning signs that a veritable fiscal conflagration lurks just around the corner. To wit, February YTD outlays of $3.102 trillion were already way the hell higher than revenues, which posted at just $2.097 trillion
So the resulting five-month deficit of -$1.004 trillion amounted to damn near 48% of revenues. And, again, the double-whammy of OBBBA and hot war in the Persian Gulf has not yet barged its way into the budget numbers.
Yet and yet. The sleepwalkers in Trumpian Washington are actually giving a one-hand clap for a declining deficit, owing to short-run timing aberration that has caused the FY 2026 YTD red ink to come in slightly below the -$1.146 trillion level posted in the first five months of FY 2025.
Then again, even in budget land it’s not over until the fat lady sings. In this case, there are some very shrill discordant notes in the YTD figures – one-time revenue gains and a temporary lull in defense spending growth – which will soon reverse and send the red ink totals soaring far higher in the months ahead.
On the revenue front, the table below tells you all you need to know. When you look at the small corner of the receipt pie accounted for by customs revenue, non-withheld income taxes on capital gains and other income of the wealthy and estate and gift taxes, there has been a cornucopia of gains. These items are up versus FY 2025 by +308%, +36% and +30% respectively, accounting for a YTD revenue gain of $194.6 billion.
Now, that’s 95% of the entire YTD Federal revenue gain of $205.2 billion, and its accounted for by revenue lines that generated just 15% of YTD collections during the ordinary year of FY 2025.
More importantly, this 70% Y/Y revenue gain in this small corner of the revenue pie ain’t gonna last. The Supreme Court has already nullified the Donald out-of-this-word tariff impositions under the IEEA of 1977 and will actually be specifying refund arrangments in short order.
Likewise, the big gains in the stock market last year are surely over and done, as we plunge into a global energy, fuel, fertilizer and manufacturing dislocation that will make 1973 and 1979 look like a walk in the park. About the only replicable piece of the aberrant first subtotal shown in the table below is the possibility that during the balance of FY 2026 rich people will keep dying at the same rate as thru February, and also that their stock portfolios don’t take a whopping between now and then.
By contrast, if you look at the 85% of the Federal revenue pie that includes the workhorses of the governments ordinary course extractions from the people – withheld income taxes from 160 million workers, payroll taxes from even more workers and the corporate income tax – the year-to date figure is most definitely not something to write home about: it’s up by only $10.6 billion or just 0.7% from last year.
That’s right. We have a Federal budget that was on track to spend 7% more than last year, owing to built-in entitlement increases like the 8.3% rise in YTD spending for Social Security retirement and soaring interest expense. But spending growth is now headed toward double digits owing to the defense spending explosion already underway – even as baseline revenues are barely tracking the flat line.
And that’s before we get a wide-open outbreak of stagflation—falling paychecks and rising inflation.
February YTD Federal Revenues, FY 2026 Versus FY 2025
David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America, TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back, and the recently released Great Money Bubble: Protect Yourself From The Coming Inflation Storm. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.
