U.S. Rep. David Schweikert (R-AZ01), chairman of the Joint Economic Committee (JEC), warned that the United States faces growing fiscal risk unless Congress acts sooner to stabilize the federal debt-to-GDP ratio.
Schweikert sent the committee’s latest Views and Estimates letter to House Budget Committee Chairman Jodey Arrington in a letter earlier this month.
“There is great uncertainty about when and how the debt will switch from sustainable, business as-usual, to an unsustainable, market-unraveling nightmare,” Schweikert wrote. “Every year we wait to change course increases leverage, and the higher the debt-to-GDP ratio the easier it is for bad headwinds—such as crisis spending or interest rate fragility—to lock us into a debt spiral. In short, allowing the debt burden to increase is a levered bet, and the downside risks are already enormous.”
JEC Chairman @RepDavid sent @HouseBudgetGOP Chairman @RepArrington the latest Views & Estimates. “There is great uncertainty about when & how the debt will switch from sustainable, business as-usual, to an unsustainable, market-unraveling nightmare. https://t.co/pPMp4K17EP
— Joint Economic Committee Republicans (@JECRepublicans) June 8, 2026
The committee’s Republican staff found that rising federal debt is structurally unsustainable and that stabilizing the debt-to-GDP ratio will require large early policy changes. The letter states that delaying action materially increases the risk of severe economic and financial consequences.
According to the letter, federal debt has recently reached 100 percent of gross domestic product, meaning the federal debt is now roughly the size of the economy’s total annual output. The Congressional Budget Office projects debt held by the public will reach 118 percent of GDP by 2035, 142 percent by 2045, and 172 percent by 2055. Treasury projections cited in the letter are higher, estimating 129 percent by 2035, 183 percent by 2045, and 245 percent by 2055.
The JEC letter describes the current debt path as a “levered bet on stability” that depends on avoiding major crises requiring substantial fiscal headroom and on future interest rates remaining favorable relative to economic growth. The letter warns that the damage to the nation’s fiscal position and status as a world power could be “catastrophic and irreversible” if those conditions deteriorate.
The committee cited estimates from the Committee for a Responsible Federal Budget indicating that a fiscal adjustment of about $9.5 trillion over ten years would be needed to stabilize the debt-to-GDP ratio at about 100 percent. The JEC letter used a similar ballpark estimate of about $9.2 trillion to close the primary deficit over a ten-year window, while noting that the exact adjustment would depend on interest rates, economic growth, the timing of policy changes, and the path of the primary deficit.
“In any case, these are magnitudes of adjustment virtually absent from current policy debates,” the letter states.
The letter recommended reforms in Medicare, international taxation, and immigration that it estimated would produce about $3.6 trillion in deficit reduction over ten years, or roughly 40 percent of the adjustment identified as necessary to stabilize the debt-to-GDP ratio.
The largest proposed savings would come from Medicare Advantage reform. The letter states that Medicare Advantage now covers 55 percent of all Medicare beneficiaries and that flawed payment policies, excessive coding practices, insufficient enforcement, and federal inaction have driven up costs. According to the JEC, Medicare Advantage beneficiaries are now estimated to cost roughly 14 percent more than they would under traditional Medicare, amounting to an estimated $76 billion in excess federal spending in 2025.
The letter cites H.R. 3467, the Better Medicare Act, as a proposal to realign Medicare Advantage incentives. The JEC estimated the legislation would reduce federal spending by approximately $1.8 trillion over ten years.
In a Fox Business appearance posted to X by Schweikert’s office, Schweikert described what he called “institutional design fraud,” citing his team’s investigations into New York and California “where they’re exploiting part of the Medicaid system for billions and billions and billions of dollars.”
Federal prosecutors say a $30 million Medicaid scheme meant for children’s mental health services helped pay for a fleet of luxury vehicles. That is bad actor fraud.
But the real bleeding is coming from New York and California exploiting parts of Medicaid for billions and… pic.twitter.com/jFyGJr3JAC
“If New York actually had the same cost in their Medicaid system,” he continued, “it would be a $50 billion savings a year if they had the same costs as other states. That’s actually where the tremendous amount of money is, because remember, we’re borrowing about a million dollars every 15 seconds. So, the scale is what’s just so hard to get your head around.”
The committee also recommended a border adjustment tax policy, which would tax business income based on where products are sold rather than where they are produced. Under the proposal, export receipts would be excluded from the tax base and import deductions would be disallowed. The JEC estimated the policy could raise approximately $1.5 trillion over ten years.
On immigration, the committee recommended shifting employment-based admissions toward higher-producing applicants through a points-based, industry-targeted framework. The letter states that an aging population and a shrinking pool of younger workers are reducing the labor force needed to grow the economy and service the debt. The JEC estimated that such a reform could produce a net fiscal benefit of $335 billion over ten years and $1.34 trillion over twenty years, assuming annual immigration remains at current levels.
Schweikert has raised the alarm regarding demographic decline as a driver of fiscal collapse, citing three unassailable facts: “debt, deficits and demographics,” in March 2025.
The letter also credited H.R. 1, commonly known as the One Big Beautiful Bill Act, with pro-growth tax provisions. The JEC said policymakers should redirect their focus toward “transparently pro-growth reforms” and cited federal land sales, reforms of the Jones Act, and policy related to port automation as examples of areas that could support growth.
Schweikert’s letter concluded that growth alone should not be counted on to resolve the federal government’s fiscal problems.
“I have highlighted fiscal reforms that would bring us about 40 percent of the way to stability of the debt-to-GDP ratio,” Schweikert concluded in the letter. “While there is strong potential for increasing economic growth as a partial solution, we should not count on growth alone to address our fiscal problems.”
The Joint Economic Committee released its Monthly Expenditures Update for March 2026 alongside the advance estimate for first-quarter 2026 Gross Domestic Product (GDP), painting a picture of an economy experiencing above-target inflation alongside continued, albeit moderating, real consumption growth and accelerating nominal activity.
From February to March 2026, headline Personal Consumption Expenditures (PCE) price index inflation accelerated to 0.66%, up from 0.38% the prior month.
Core PCE inflation, which excludes volatile food and energy prices, rose 0.29% compared to 0.37% (durable goods +0.42%; nondurable goods +1.98%), while services inflation stood at 0.32%. Gasoline and other energy goods posted a sharp 19.23% month-over-month rise.
Real personal consumption expenditures (PCE) advanced 0.24% ($39.57 billion), in the period. Real spending on goods rose 0.55% ($31.34 billion), led by durable goods (+0.94% or $20.12 billion), while services spending increased a more modest 0.10% ($10.63 billion). The nominal personal savings rate declined 0.3 percentage points to 3.6%.
On the income side, headline personal income grew 0.56% ($149.22 billion). However, real disposable personal income per capita edged down 0.07%, indicating that after-tax income growth lagged behind price increases.
Year-over-year measures showed headline PCE inflation at 3.50% in March 2026 compared to March 2025—well above the Federal Reserve’s 2% target—while core PCE inflation registered 3.20%. Both figures accelerated from the prior year’s pace.
GDP Advance Estimate
In its Q1 2026 GDP Advance Estimate the Committee reported that real GDP increased at a 1.99% annualized rate from the fourth quarter of 2025. Current-dollar GDP rose 5.64% annualized, or $433.731 billion, reaching $31.856 trillion. The GDP deflator contributed approximately 3.6 percentage points to nominal growth.
Consumer spending contributed 1.1 percentage points to real GDP growth, while nonresidential fixed investment provided a strong 1.4 percentage point boost. Government spending added 0.7 points, and private inventories contributed 0.4 points. Net exports subtracted 1.3 points, and residential investment was a slight drag at -0.3 points.
Category highlights (Nominal PCE Levels, March 2026)
Housing and utilities: $3,904.5 billion (17.86% of total)
Health care: $3,741.3 billion (17.11%)
Financial services and insurance: $1,822.6 billion (8.34%)
Food and beverages: $1,547.8 billion (7.08%)
Food services and accommodations: $1,526.4 billion (6.98%)
Notable year-over-year nominal increases included financial services and insurance (+10.46%), health care (+8.02%), and transportation services (+9.53%). Gasoline and other energy goods rose sharply both month-over-month (+19.23%) and year-over-year (20.97%).
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Guess what! Inflation, growth, jobs: Conventional wisdom from America’s economic punditry was across-the-board wrong. Again.
At the year’s start the punditry predicted that Trump’s tariffs would cause a surge of inflation and would likely trigger recession. Well, the Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) numbers on Thursday. Reuters’ polling of private economists predicted inflation would accelerate to 3.1% year-over-year, the fastest pace since 2023. The actual BLS figure came in at 2.7%, with core inflation even lower at 2.6%.
But the news gets better. Year-over-year inflation means it includes inflationary pressures from the end of Biden’s presidency. It’s a very lagging figure.
To understand what inflation’s doing now, and to filter out some of the data’s noise, a better gauge is to look at inflation over the last two months, which came in at 1.2% annualized, well below the Federal Reserve’s 2% target.
There is a small caveat to this good news. Due to the Schumer government shutdown, BLS was unable to collect all the usual data for the CPI report, so some items were left out. The economists who predicted accelerating inflation are thus arguing that inflation would, with all the data, have been much higher and thus excusing their bad forecasts.
However, as New York Fed President John Williams points out, the missing data “pushed down the CPI reading, probably by a tenth or so.” OK, so topline inflation was 2.8% while the annualized two-month figure goes to 1.8%, still well below consensus forecast and still below the Fed’s target rate.
What about Trump’s tariffs? To be sure, they pushed some prices up faster than they otherwise would have. But the tariffs only applied to a small fraction of all the goods and services sold in America. So, when it comes to overall inflation, the net effect could never be more than a one-time rounding error.
Further, inflation is fundamentally a monetary phenomenon. These tariff-induced price bumps occurred against a background of the underlying inflationary impulse from money supply interacting with money demand. The Fed has run a moderately restrictive policy for years, so naturally inflation is falling.
Assuming at least one of the Fed’s legion of economists can do this two-month calculation and has the temerity to show it to Chair Powell and the rest of the Fed’s leadership, then further Fed rate cuts should be assured and imminent on the road to neutral.
And what about that predicted recession? After inflation, Gross Domestic Product (GDP) soared 3.8% in the second quarter of this year, while the Atlanta Fed’s “Nowcast” of third quarter GDP is a still-impressive 3.5%.
Some of Reuters’ economists will likely portray this slight slowdown in growth as “scary” and a sign of pending recession. Nonsense. The economy is ripping, with the only recession pending threatening the salaries of those economists making silly forecasts.
Finally, those still desperate to argue economic weakness might turn to the labor market. The economy generated about 166,000 jobs a month during Biden’s last year in office. So far under Trump the economy has generated about 50,000 jobs a month. Sounds scary, but much of that decline occurred because federal employment fell by 27,000 jobs a month.
The even bigger jobs story is that employment by foreign-born workers has fallen by about 100,000 a month under Trump. This is what happens when immigration laws are enforced and the border is secured. Put it all together and private-sector native-born employment is doing very well.
And the cherry on top is that after stagnating for the four years of the Biden presidency, median real wages are now rising at a 1.6% annualized rate. Rising wages and plentiful private-sector jobs, not gimmicks like Obamacare subsidies and rent controls, are how you prosper American workers or, in today’s parlance, address “affordability.”
Just don’t be surprised if you don’t hear that from the legacy media.
J.D. Foster is a contributor to the Daily Caller News Foundation. He is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.
The latest read on Gross Domestic Product (GDP) of 5.2% real growth suggests the US economy soared in the third quarter. As momentum matters, this suggests the next quarter and the next will also be strong. One can hope, but a great downshift is far more likely.
For starters, it’s likely the economy was nowhere near as strong as the headline suggests. GDP gets all the love in the press, but Gross Domestic Income (GDI) is an equally valid measure. If we could measure these things precisely, they would always equate. GDI came in at 1.5%, much lower than GDP’s 5.2%.
Much the same data conflict arises in the jobs figures. According to the press fave employers’ survey, the economy created about 200 thousand jobs monthly since May. But the equally valid household survey has been flat over the same period. Again, that’s a big difference over an extended period between equally valid measures of the labor market.
One measure strong; one weak. Secret sauce clue: When major economic indicators send very different signals, it usually means the economy is at a turning point.
Why now? First, because the American consumer, that great engine representing about two-thirds of GDP, is running low on gas. The hoard of excess saving built up in years past is now mostly gone. LendingClub reports 60% of Americans are living paycheck-to-paycheck, which means they’ve little to fall back on and little room for error or bad luck.
The New York Fed confirms the consumer’s stretched thin, reporting that credit card debt last year displayed “the largest such increase since the beginning of our time series in 1999.” Credit card balances shoot up when savings go down and the checking account’s running dry. The Fed also reports the share of newly delinquent credit card users is the highest in about a decade and on an upward trend.
Going into the pandemic the Fed threw the sink at sustaining the economy, one consequence of which was high inflation. Coming out of the pandemic, the Fed finally woke up to inflation’s gathering momentum. The consequent good news is that inflation is trending downward.
The problem for the American consumer is the damage that inflation has already done. When inflation shot up in 2021 and 2022, nominal wages didn’t. Families took a huge hit in what they could afford and the gap remains. To preserve their standard of living, they resorted to spending down their past savings and spending up their credit card balances.
The natural consequence of stressed consumers is a downshift in spending. The National Retail Federation reports that core retail sales have been essentially flat for two months straight. Retailers report consumers are resisting price increases, hesitating to pay full price, and are increasingly looking for discounts and promotions. The obvious reaction to financial insecurity is to cut back; think cutting out the Rib-Eye at Whole Foods for hamburger from Aldi.
A weakening of consumer spending would occur against a shaky background elsewhere. Housing has been flat or down for two years now. Shipments and new orders both suggest the manufacturing sector is weak. If the consumer really is about out of gas, then the economy could see a marked downshift. And now we come full circle back to the Fed, which put us on this rollercoaster with its kitchen sink response to the pandemic.
The Fed is standing pat with its restrictive policies even as inflation slows and will likely do so for many months. Quite reasonably, before relaxing the Fed wants to be sure inflation continues toward its 2% goal rather than re-igniting. But standing pat while inflation slows means Fed policy is actually becoming steadily more restrictive. Today’s tapping becomes tomorrow’s stomping on the brakes, and thus is likely to generate the great 2024 downshift.
J.D. Foster is a contributor to the Daily Caller News Foundation. He is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.
