Quoth the Raven
· QTR’s Fringe Finance
· July 18, 2026 at 15:55
· ⏱ 6 min read
| Read on Substack ↗
Summary
The article argues that U.S. government spending has grown 89% since 2016 to $7.2 trillion while revenue rose only 64%, leading to a persistent and worsening deficit. Interest expense has ballooned to $1.04 trillion (16.5% of spending), creating a debt spiral dynamic that the Fed cannot easily relieve due to elevated inflation. For markets, this implies ongoing upward pressure on Treasury yields and a structural headwind for risk assets as fiscal dominance intensifies.
•Government spending increased 89% from 2016 to 2026, reaching $7.2 trillion.
•Revenue grew only 64% over the same period, far slower than spending.
•The Q2 2026 deficit was $198 billion, 6.6x larger than the $30 billion deficit in Q2 2025.
•Interest expense on the national debt hit $1.04 trillion on a trailing twelve-month basis, now the second-largest budget item after Social Security at 16.5% of spending.
•Revenue in Q2 2026 was actually lower than in Q2 2025, with tariff revenue being a key contributor that is expected to decline.
•The trailing twelve-month deficit stands at $1.8 trillion, representing 25% of all government spending.