Uncommenced Commitments.
A fiscal predicament.
“Most mornings I learn more from News Items than I do from all the traditional papers I read combined.“ — Michael Blair, former presiding partner, Debevoise & Plimpton.
1. Not that anyone seems to care, but:
Around 2030, the United States is projected to surpass three milestones that illustrate the lack of precedent for the government’s fiscal predicament.
According to the Congressional Budget Office, 2030 is the year when federal debt held by the public as a share of the economy will exceed the record set by World War II. Unlike in the ’40s, this debt shows no signs of ever declining.
In 1945, 84 percent of federal outlays were on defense, a tsunami of spending that would ebb once World War II concluded. In 2025, 73 percent of federal outlays were on mandatory spending or interest payments, which are legally obligated to continue.
The year 2030 is also roughly when the ratio of seniors to the total population will reach 1 in 5. As recently as 2008, the ratio was around 1 in 8. Seniors’ rising share of the population mechanically raises Social Security and Medicare costs and pushes them onto a proportionally smaller working population.
The U.S. always used to be able to count on a naturally rising population as an engine for economic growth, but that will no longer be the case. That’s because 2030 is also the year when the CBO projects that deaths will begin to exceed births. The entitlement programs making up much of the budget were designed under 20th-century demographic expectations that no longer hold true.
Social Security used to take in more money than it gave out, but that money was spent on other things. The program has run annual deficits since 2010. It is projected to go insolvent in 2032, at which point seniors would receive a roughly one-quarter cut in benefits across the board.
Medicare’s budget-busting makes Social Security’s look modest by comparison. Of the projected $138 trillion budget shortfall over the next 30 years, $109 trillion is from Medicare. Rising health care costs, combined with an aging population receiving far more in benefits than it ever paid in taxes, spells fiscal Armageddon. The Medicare Hospital Insurance trust fund goes insolvent in 2033.
The fiscal challenges scheduled to arrive in the 2030s are actually based on optimistic assumptions. (Source: washingtonpost.com)
2. Not that anyone seems to care, but: The federal government’s tariff windfall is evaporating faster than expected, and the Congressional Budget Office says it’s blowing a $200 billion hole in this year’s budget. CBO now projects the fiscal 2026 deficit will hit $2.1 trillion, according to the nonpartisan scorekeeper’s Monthly Budget Review released Monday—up from the $1.9 trillion the agency forecast in February, before the Supreme Court struck down President Trump’s signature tariff program. Federal spending is running close to its February baseline for the year, CBO noted, meaning the deficit is almost entire due to the revenue side. (Sources: fortune.com, cbo.gov. Italics mine.)
3. Nvidia reached deals with some of Wall Street’s largest firms aimed at raising massive amounts of capital to help the chip maker’s customers finance the cost of computing power. The chip maker has signed agreements to partner with Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR to establish “compute financing platforms,” the companies announced Monday. The firms aim to deploy over $500 billion of outside capital in the coming years. The firms said the platforms will create pools of capital at “attractive rates” for Nvidia customers. (Source: wsj.com)
4. Goldman Sachs:
Credit investors have also been increasingly focused on the lease commitments of the hyperscaler sector. Using the most recent data from the ongoing earnings season, we have tracked $1.5 trillion in aggregate lease commitments. Of this amount, $1.0 trillion is associated with leases which have not yet commenced. Because of the nuances of lease accounting under US GAAP, these ‘uncommenced’ lease commitments are not reflected in the financial statements, even though they will result in future lease payments (or other obligations) in upcoming years. (Source: goldmansachs.com, ft.com. Italics mine.)
