Thread

10-year Treasury yield climbs above 5.3% to a level not seen in 24 years

122 points · 193 comments · kaycebasques

missedthecue · 1790820728 · focus · HN ↗
In 2026, entitlement spending + interest expense will be over 100% of federal tax revenue.
That's before the military, foreign aid, and everything that starts with "Department of"
1. toomuchtodo · 1790820989 · focus · HN ↗
  Yeah, cut the $1T/year in defense spending and raise taxes to pay down the debt (to cut $1T/year in interest expenses) and balance the budget. Entitlements remain because workers are entitled to those benefits they worked for. The same workers the wealthiest need to suck $5T+ a year of profit out of the economy.
  We used to have 94% top tax bracket rate at one point, and higher tax rates in general. We’ll find the will to raise taxes as soon as the bond market compels the spineless in Congress to find the will (as the cost of debt continues to rise into the future), because you cannot deceive the bond market.
  <a href="https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/" rel="nofollow">https://taxfoundation.org/data/all/federal/historical-income...
  <a href="https://www.axios.com/2026/09/27/rates-borrowing-yields-fiscal" rel="nofollow">https://www.axios.com/2026/09/27/rates-borrowing-yields-fisc...
  - In projections that the Congressional Budget Office produced last February, net interest costs are already at $1 trillion this year and on track to reach $2 trillion by 2035, meaning that much of federal spending is needed just to service old bills.
  - But those projections assumed 10-year Treasury yields were in the ballpark of 4.3%. They're now nearly a full percentage point higher than that.
  - In startling numbers that CBO released this week, in a scenario in which interest rates were 1 percentage point higher than its baseline, debt held by the public would grow to 222% of GDP in 2056, 47 percentage points higher than the baseline.
  <a href="https://www.cbo.gov/publication/62758" rel="nofollow">https://www.cbo.gov/publication/62758
  1. KerrAvon · 1790822555 · focus · HN ↗
    the right wing is not going to like where this all leads (and neither are the centrists or any of the rest of us, tbh)
  2. zeroonetwothree · 1790823007 · focus · HN ↗
    It’s essentially impossible to balance the budget without cutting entitlements as the comment you are replying to suggests.
    toomuchtodo · 1790823088 · focus · HN ↗
    Yes, I specifically said raise taxes because many here believe spending cuts alone will solve this. It is impossible to not raise taxes based on debt load and forward mandatory spending curves. The bond market will force this to occur, like your credit card company raising your interest rate and bringing your credit limit down to your current balance.
    Taxes will go up, voluntarily or involuntarily. If we didn’t want to get here, well, should’ve never spent so frivolously on tax cuts for the wealthy and a bloated military that is unable to pass an audit. But we did, and that debt is going to have to be paid back, with interest. It’s impossible to grow out of this debt, and there are more workers than very wealthy people and their politicians.
    rickydroll · 1790823931 · focus · HN ↗
    They are called “entitlements” because we have a reasonable expectation of getting what we were promised when we agreed to pay taxes as our part of the social contract.
    If you say, “We should have invested more,” I point you to the 40% of current retirees that were not in a position to invest because their jobs didn't pay them enough above the cost of existing. And then there are any number of events, such as age discrimination, common medical issues, divorce, and bankruptcy, that destroy retirement plans.
    From what I can tell, it's not possible for the vast majority of the population to be able to save for a 20 plus year retirement.
    One of the things that keep people from saving are the activities driven by their investing in the stock market. To increase returns, "Activist investors" and private equity drive companies to shed jobs. You shed a job, you destroy a person's ability to save for retirement, which makes them more dependent on the social contract of Social Security and Medicare.
    Cutting benefits will only cause suffering. The cost will fall on society in other ways in terms of elderly homeless people filling the ERs, begging in the streets, or committing suicide. Is it time for a "Modest Proposal II"?
    digitaltrees · 1790826043 · focus · HN ↗
    Totally false. It was balanced in the 90s. Its just that raising taxes has to be part of the equation. Guess what, three successive republican administrations have lowered taxes. So maybe just roll those back.
    missedthecue · 1790835559 · focus · HN ↗
    But that's not comparable. If the tax take/GDP was the same today as it was when the budget was balanced then (19.9%), there would still be a deficit well over a trillion dollars. The US is simply spending a lot more. In terms of entitlements, certain things have changed structurally.
    For example in the year 2000, people aged over 65 were 12.4% of the U.S. population. Today, that demographic has grown dramatically to 19% of the population. That's fewer people working and paying taxes while also simultaneously drawing more from medicare and social security.
    This doesn't mean it's "impossible". But to balance the budget today without major spending cuts would require raising taxes 39%. It's just so different than it was then to make the math work out.
    khriss · 1790837163 · focus · HN ↗
    If the remaining deficit is around a trillion dollars, and we spend more than that on needless wars in the middle east, it's easy to see what to cut to balance the budget....
    tzs · 1790837850 · focus · HN ↗
    One thing to do would be get rid of the $184k cutoff on payroll tax. That would greatly extend the life of the Social Security and Medicare trust funds.
    That gives a lot more time to phase in any longer term changes to those programs.
    digitaltrees · 1790857498 · focus · HN ↗
    So raise taxes more.
    digitaltrees · 1790984256 · focus · HN ↗
    But that is because of wars and stimulus because of failed policies like bush’s push for home ownership and mortgage deregulation and Clinton’s move to deregulate banks. The policy could and should be that if emergency events happen emergency taxes are levied over time when the economy allows.
    Also not all deficits are bad. It is reasonable to borrow to invest in basic infrastructure. The return on investment from nasa and the university system and darpa to the US economy dwarf the cost of borrowing.
    ryathal · 1790867076 · focus · HN ↗
    The balance in the 90s was double counting social security surplus while also spending it as intra government debt.
  3. kccqzy · 1790823465 · focus · HN ↗
    I have seen no evidence that Congress cares about what the bond market thinks. In what scenario do you think the bond market can compel Congress?
    toomuchtodo · 1790823892 · focus · HN ↗
    <a href="https://x.com/Aviation_Intel/status/2105415209284464925" rel="nofollow">https://x.com/Aviation_Intel/status/2105415209284464925
    > Bond market is in revolt about the national debt and I hear crickets from Washington. You think this would be a crisis. Amazing really.
    Some combination of the bond market rejecting Treasuries for other similar investments while also pushing up other debt costs causing excessive failures in interest rate sensitive parts of the economy. Hard to predict when, but it’ll look strikingly familiar to the 2008 GFC I think, the day Bear Stearns collapsed. An event will occur, and there will be a cascading loss of confidence in the bond market. Not a great time when diesel fuel is also at record high prices and will be for at least the next year.
    toomuchtodo · 1790831342 · focus · HN ↗
    Global bond sell-off deepens as Asian yields jump - <a href="https://news.ycombinator.com/item?id=49917899">https://news.ycombinator.com/item?id=49917899 - September 2026
    toomuchtodo · 1790893615 · focus · HN ↗
    How a Global Debt Crisis Starts - <a href="https://news.ycombinator.com/item?id=49927749">https://news.ycombinator.com/item?id=49927749 - October 2026
    AnimalMuppet · 1790861535 · focus · HN ↗
    That may be true, but why is Congress the metric? Congress is broken. In how many of the last 20 years have they actually passed a budget? It might be two; I'm pretty sure it's not more than five. That's their most basic job, and they can't or won't do it.
    Whether Congress cares does not tell you whether there's a problem. The fact that Congress doesn't care is part of the problem - maybe the biggest part.
    robocat · 1790884024 · focus · HN ↗
    > and they can't or won't do it
    Instead of blaming Congress, perhaps blame democracy.
    Voters loath austerity, and they support spending.
    Watch the experiment happening live in New Zealand elections. Our incumbant conservative party (National) is aiming for a budget at about 30% of GDP. Our progressive party (Labour) wants to increase taxes and increase spending to maybe 33% of GDP.
    You can see if voters care about keeping spending in check, because it seems likely to be a central issue of campaigns. Although we have MMP voting so it isn't totally clear. Also note that I think most of our politicians would be seen as left-wing if looked at by anyone on the right.
  4. joegibbs · 1790823687 · focus · HN ↗
    There's this perception that the majority of US government spending is on the military which is completely untrue.
    Defence is only 12% of the US federal budget - what are you going to cut it to? It's not going to solve the issue even if it's abolished. Over the last 10 years health, Medicare and Social Security have grown 103%, 83% and 78% respectively for an increase of $1.64 trillion to $3.55t vs a $916b on defence. With an aging population it's only going to cost more and more over time, you can't continue to put higher taxes on a shrinking share of productive population to care for more and more unproductive retirees under any economic system.
    toomuchtodo · 1790824064 · focus · HN ↗
    Of course those programs grow when people get old, that’s when they grow! I suppose the federal government should’ve invested in investments to increase productivity to support a rapidly aging population instead of using cheap debt for inefficient, unnecessary non mandatory spending (tax cuts and military spending).
    > you can't continue to put higher taxes on a shrinking share of productive population to care for more and more unproductive retirees under any economic system.
    Start at the top with very high marginal tax rates for the wealthiest, work your way down. The wealth exists, tax it.
    <a href="https://en.wikipedia.org/wiki/List_of_wealthiest_Americans_by_net_worth" rel="nofollow">https://en.wikipedia.org/wiki/List_of_wealthiest_Americans_b...
    <a href="https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/" rel="nofollow">https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
    (The top 10% of U.S. households own roughly 67% to 68% of the total household wealth in the United States, the vast majority of which are securities)
    what · 1790824866 · focus · HN ↗
    Raising the income tax rates aren’t going to help though. The ultra wealthy you want to tax have (basically) no income to tax. Are you proposing to institute a wealth tax?
    toomuchtodo · 1790825145 · focus · HN ↗
    If necessary, yes. Whatever form is necessary to effectuate the target outcome. We tax real estate, real estate is just another form of asset and wealth (with a similar liquidity profile to private equity). We can do the same with securities, equity (public or private), etc.
    what · 1790826107 · focus · HN ↗
    We don’t really tax real estate. That’s why all the old farts pay $1000/year in property taxes on a home that’s worth millions. Do you propose taxing them on the actual value of their homes?
    toomuchtodo · 1790826169 · focus · HN ↗
    > We don’t really tax real estate.
    This is not a serious argument based on total property tax collected across all 50 states on an annual basis (~$2T) [1]. Federal government spends ~$7T/year against $2.4T in personal income tax, $1.7T in payroll tax, and $530B in corporate income tax (~$4.9T in revenue) [2].
    Could we tax real estate more? I’m sure, not opposed based on fair valuations and implementation details. We should start with securities first imho, as we already tax real estate today. Conveniently, the top 10% of households own 93% of US equities. US GDP is ~$32T annually.
    [1] <a href="https://www.nahb.org/blog/2025/03/state-local-property-tax-collection-2024" rel="nofollow">https://www.nahb.org/blog/2025/03/state-local-property-tax-c...
    [2] <a href="https://usafacts.org/government-spending/" rel="nofollow">https://usafacts.org/government-spending/
    what · 1790904361 · focus · HN ↗
    What? Your numbers are way off. You didn’t read your source, the $2T is total local/state tax revenue, not property taxes.
    Also, no we shouldn’t tax securities in a wealth tax scheme. We already tax them when you actually realize a profit or loss. Should we tax the value of your 401k?
    atmavatar · 1790827475 · focus · HN ↗
    One thing that would capture tax revenue from the wealthy and eliminate a rather large tax loophole would be to automatically realize gains on stocks used as collateral for loans.
    khriss · 1790837025 · focus · HN ↗
    edit: formatting
    > Are you proposing to institute a wealth tax?
    Ideally, but failing that raise the estate tax to 90% for estates over the current exemption limit of $15 million and eliminate all trust loopholes.
    The billionaires would be able to enjoy their money in their lifetimes and still ensure that their children are taken care of in their lifetimes all while paying their fair share to society upon death.
    digitaltrees · 1790825960 · focus · HN ↗
    Single payer Healthcare would flatten that curve by removing the incentive that insurance companies and health providers have to raise prices in coordination. Insurance is only allowed a certain percentage of admin costs (salaries etc) and profit from premiums so their incentive is to raise premiums but they can only do that by showing increased costs. Health providers have an incentive to show their costs aren't fully paid by insurance so they can also justify inflation of expenses.
    burnt-resistor · 1790828360 · focus · HN ↗
    Universal SPH would save a net $300B to $1T, reduce paperwork, reduce deaths/improve outcomes, and provide better care. The FUD canards of "rationing", "waiting lists", and "communism" as well as classism and corrupt profiteering are the barriers to less suffering. Just give everyone the same coverage that doesn't have a 20% hole or lifetime limits... and that eliminates Medicare, Medicaid, Tricare, CHIP, ACA, and most private insurance, and most billing coding and prior-auth nonsense. Not doing so wastes money and kills people, just like parts of the BBB coming into effect after the midterms is going to bankrupt and kill thousands of people.
    digitaltrees · 1790833011 · focus · HN ↗
    I agree. I own home health care agencies in 14 states. The admin we have to fund is absolutely ridiculous and wasteful. But republicans use clerical errors to scream about waste fraud and abuse because that justifies cutting spending and so the system operates inefficiently and costs keep rising on the public and private side.
    burnt-resistor · 1791016798 · focus · HN ↗
    Nothing will change in a lasting manner without first leadership addressing political and campaign corruption. Then and only then can SPH and nationalization/re-regulation/nonprofitization happen. For-profit healthcare should be allowed on the periphery but only under a carefully proscribed and uniformly-regulated manner rather than the predatory manner (i.e., private equity) allowed now. Nearly all healthcare should be nonprofit, government, and/or small businesses vaguely similar to the UK NHS or how it worked 50 years ago.
    jmye · 1790872756 · focus · HN ↗
    [dead]
    robocat · 1790882866 · focus · HN ↗
    > Single payer Healthcare
    Have you studied them in other countries? I suggest you inspect your assumptions by looking at what already happens.
    Voters want infinite "free" healthcare from their politicians, so healthcare costs continuously increase. You have little recourse to say no to taxes.
    In New Zealand ~17% of government expenditure was on health in 2000 and in 2026 it was ~22%.
    In NZD it went from ~$10B to ~$40B (inflation and demographics are also an influence).
    Privately paid also exists, but only ~1/3 the spending of public health. NZ government ACC spending is also huge.
    Government ownership does not fix the problems you wishfully hope it might.
    digitaltrees · 1790900495 · focus · HN ↗
    I did. I wrote several papers on it. The OECD spends far less for better outcomes than the US with lower slope of growth. And the growth is in large part due to demographic changes as populations age. Changes in demographics shouldn't be used to say health care doesn't answer cant work. Its ratios of spending across a population as some pay in when they are healthy and some consume as they age. Change the ratio and cost as a ratio also changes.
    khriss · 1790836748 · focus · HN ↗
    Defense might not be a cure all for the deficit, but reducing expenses to the tune of 12% sure is a heck of a start. Clearly defense spending isn't buying us that much if the our armed forces can't deal with a middle income country (Hormuz blockage) and a group of rebels (Bab al Mandeb blockage).
    Cutting defense doesn't even need to be complicated. Just stop forever wars in the middle east. It won't hurt our actual defense capabilities and will raise America's stature in the world. Heck, we have the best defense imaginable given to us for free (the Pacific and the Atlantic oceans), to the extent that two world wars combined didn't see a major attack on the US mainland.
    Cutting (or better still privatizing) social security, medicare and medicaid, while being the Republican wet dream, actually translates to direct harm to millions of citizens.
    JKCalhoun · 1790861778 · focus · HN ↗
    "Defence is only 12%…"
    Only? My understanding is that this is double, triple many European countries.
    Medicare, Social Security: not discretionary spending. Also self-funded programs (well, Part A of Medicare).
    stickfigure · 1790977438 · focus · HN ↗
    > Only? My understanding is that this is double, triple many European countries.
    Considering what is going on in Europe right now, maybe this is not a good point to try to make.
  5. digitaltrees · 1790825705 · focus · HN ↗
    Exactly this. Thank you for the thoughtful fact based analysis
2. margalabargala · 1790821186 · focus · HN ↗
  Not sure why you're getting downvoted. I thought you were wrong, looked it up, and you're correct.
  In 2025, federal gov revenues (total, not just tax) were $5.26T: <a href="https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/" rel="nofollow">https://fiscaldata.treasury.gov/americas-finance-guide/gover...
  In 2026, entitlements plus interest is projected to cost $5.45T: <a href="https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/" rel="nofollow">https://fiscaldata.treasury.gov/americas-finance-guide/feder...
  1. JauntTrooper · 1790824298 · focus · HN ↗
    We would have to raise federal taxes by an average of at least 39% per household and on businesses =just= to balance the deficit.
    The reason the US is a comparably "low tax" country is because we're borrowing the difference.
    What worries me the most is that this is at a high point in our economic cycle, when tax collection is arguably the highest. The deficit and debt will expand significantly in the next recession.
    digitaltrees · 1790825642 · focus · HN ↗
    This is the best time to raise taxes specially because the business cycle allows it. Guess what would help reduce inflation...raising taxes.
    ethbr1 · 1790828525 · focus · HN ↗
    The modern US is a great example that maybe you should have tax and fiscal policy somewhat removed from democratic hands.
    I.e. have a Fed-like entity that gives Congress a max in spending for the current tax policy, and Congress is required by law to stay below that number
    Fixing US debt has always been politically unpopular, and it always will be.
    digitaltrees · 1790833102 · focus · HN ↗
    Checks and balances were supposed to do that. Federalism was supposed to do that. Republicans have played a 60 year strategic game really well and blocked the checks and balances. Here we are. With no way back quite frankly
    soerxpso · 1790835570 · focus · HN ↗
    In what way would checks and balances do that at all? The only branch that has any sort of leeway to pass unpopular policies is the Supreme Court, and setting budgetary constraints is far outside their purview.
    adjejmxbdjdn · 1790848712 · focus · HN ↗
    In a world where the president wasn’t politically associated with Congress (the US system It’s different from most in that the executive is not elected from the legislature), the President could theoretically demand Congress send them a balanced budget to sign, otherwise they would be responsible for the cuts.
    Unfortunately the U.S. constitution was written with the, in hindsight, naive assumption that political parties could be avoided.
    This just led to a system that has political parties but doesn’t really acknowledge their existence and therefore makes it difficult to regulate their behavior.
    imightbebatman · 1790936882 · focus · HN ↗
    Madison talked about this problem during the Virginia ratifying convention. There is no government structure that can survive bad actors. His solution was that informed voters would punish bad actors. -- We're in short supply of informed voters and accountability isn't a thing anymore.
    ethbr1 · 1790945629 · focus · HN ↗
    Punishing bad actors depends on informed voters, but in a larger population democracy it also depends on the informed voter : uninformed voter ratio staying above some value.
    The lower the ratio sinks, the less weight informed voters have, and the less intelligent the outcome gets.
    The modern party duopoly exacerbated the issue (parties mobilize uninformed voters and often actively work against informing them), but voter enfranchisement also seriously impacted.
    Universal suffrage is amazing from a human rights and ensuring everyone has political power standpoint, but troublesome when you have poor levels of universal education and ability for voters to inform themselves.
    In modern times, with modern populations (US or larger), it feels like indirect democracy might be a better answer.
    Allow voters to directly elect non-partisan voting representatives (many, so elections are hyper-local and candidates individually canvas), then pay those representatives a stipend for a few months (like jury duty) which they spend educating themselves on issues. Then have those representatives vote.
    imightbebatman · 1790946453 · focus · HN ↗
    Sorry. This is utopian. If those, let's call them electors, "educated themselves" with sources from RAND or worse, Fox/Breitbart types. Or to be non-ideologically biased about the point, communistUSA. Then they too would act as bad actors when they voted.
    At the end of the day, when all the BS gets boiled away and we are left with raw/brutal reality. -- Any group of people attempting to govern themselves will end up with the government their collective will and (i'll use the loaded term) virtue deserves. The only caveat is time.
    cindyllm · 1790946571 · focus · HN ↗
    [dead]
    HDThoreaun · 1790879803 · focus · HN ↗
    Putting fiscal policy in technocrats hands seems like a bad idea to me. Most technocrats are completely divorced from the experience of average people. Since their incentives dont align they would end up implementing bad policy thinking it was good. Tax policy could certainly work though. Most tax law is written by technocrats today, they just need a politician to champion it after its written for it to become a law.
    ethbr1 · 1790895867 · focus · HN ↗
    Imho, the way to do it is to allow the unelected technocrat body to set the general parameters (e.g. max available spending for current tax policy) while leaving the specific params (e.g. budget items) to Congress.
    Technocrat bodies seem to do okay with setting scientifically-supported, non-specific directions, that can then be decomposed into specific directions by people better connected to constituents.
    imightbebatman · 1790936687 · focus · HN ↗
    This couldn't ever work. In a crisis like 2007 the US rapidly going into deficit spending is the only thing that kept the financial system running. Have a hard cap during the next crisis and the Great Depression will start having numbers beside it. Economics is a soft science and politics isn't a science at all.
    ethbr1 · 1790941879 · focus · HN ↗
    Any economist on such a body would have seen that the post-Bear Stearns reaction in 2008 merited exceptions to fiscal policy.
    Such a body presumably would also realize that deficit spending on an average non-crisis Tuesday should be much more tightly reigned in.
    I chose the Fed as an example because, whether they're correct or not, they absolutely pivot around exceptions.
    imightbebatman · 1790944893 · focus · HN ↗
    This is precisely my point. Who decides what is and is not a crisis. Germany tried a version of what you're advocating for and recently realized it was unsustainable, and declared a crisis so they could up defense spending.
    Trump has declared crisis events no less than 20 times to justify his insane policy decisions.
    We're just playing pretend games now.
    ethbr1 · 1791076041 · focus · HN ↗
    The entire point of the Fed et al. is to remove the ability to decide what is and isn't exceptional from those who have political stakes in declaring everything exceptional.
    [deleted] · 1790940253 · focus · HN ↗
    [deleted]
    whatever1 · 1791003942 · focus · HN ↗
    In America the 6-7figure households pay almost all of taxes. Lower incomes, higher incomes pay almost nothing.
    These are the W2 workhorses who receive also no explicit current benefits from the gov (bar national security). They already pay taxes to the tune of 30-40% for zero benefits.
    It will be hard to tell these folks that they need to pay 60–80% taxes on their W2.
3. digitaltrees · 1790825567 · focus · HN ↗
  Entitlement spending has its own tax base though doesn't it? We could just raise taxes right?

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