U.S. President Donald Trump smiles as he attends the U.S. Army's 250th Birthday parade, on the same day of U.S. President Donald Trump 79th birthday, in Washington, D.C., U.S., June 14, 2025. REUTERS/Carlos Barria
President Donald Trump’s 2027 budget contains trillions of dollars in grief for the American people down the road despite its innocuous appearance, according to a recent report.
“America’s long-term budget outlook just got a lot scarier,” Fortune Magazine reported. “If the bond vigilantes are already circling, and if they’re looking for more reasons to dump U.S. bonds and push Treasury yields to crisis levels, they need do nothing more than read the newly issued Budget of the U.S. Government for Fiscal Year 2027 (starting Oct. 1, 2026). The document, compiled by the White House’s Office of Management and Budget (OMB), calls for big spending increases, chiefly for defense, and promises to finance the added outlays via revenues swelled by fantasy rates of economic growth and phantom savings.”
The report added that Trump’s budget does not account for the fact that, if they spend the allocated money but do not earn enough revenue to offset it as their optimistic projection insists will happen, “America will edge even closer to a fiscal cataclysm prompted by a ruinous rise in interest expense.”
Should Americans suffer that anticipated fiscal hit, Republicans will either need to raise taxes on the wealthy or cut important social welfare programs like Medicare, Medicaid and Social Security. Notably, the president’s proposed budget does not even mention those programs.
“The report takes aim at only two major areas,” Fortune wrote. “The first is discretionary spending, where Trump requests big increases for the Department of War while advocating reductions in nondefense discretionary (NDD) categories. The second: projections for key metrics such as GDP and interest rates that are crucial drivers on the revenue and expense sides.”
Jessica Riedl, a budget and tax fellow at the Brookings Institution, told Fortune that “the realistic way to read it is as an historic defense spending increase coupled with fake offsets on spending and revenues.” She added that “it means that annual deficits would exceed $4 trillion by 2036,” a number that “is totally unsustainable… They can’t be the party of endless tax cuts, historic defense spending hikes, and still not touching Social Security and Medicare. Something’s got to give.”
Fortune is not alone in anticipating problems for Social Security and Medicare under Trump’s budget.
“I am oversimplifying matters a bit — but only a bit — when I say the following,” wrote conservative commentator Jonathan V. Last from The Bulwark on Thursday. “If the petrodollar system were to change, then America’s ability to finance debt as cheaply as we do would be imperiled. And so our ability to sustain Social Security and Medicare would be imperiled, too.”
Last added, “I don’t want to overstate things. The changes wouldn’t happen overnight. These things take time to work their way through the global financial system. And we could still borrow money in a world without petrodollars. But the interest rates would be higher. Which means that we’d have to either raise taxes or cut benefits just to stay at par.”
Martin O'Malley, who served as President Joe Biden’s Social Security Commissioner under President Joe Biden, disagreed with parts of Last’s analysis but agreed that Trump is endangering the program.
“This isn’t true — but it is often repeated,” O’Malley told AlterNet regarding Last’s claim that “our ability to do deficit spending is used to prop up Social Security and Medicare, which are too costly to be sustained through current revenues.” He clarified the matter to AlterNet.
“Social Security is a pay as you go program,” O’Malley said. “It is not funded by deficit spending. It is more akin to an insurance company. People premiums and benefits are paid out from those premiums. Even the surplus — which because of income inequality is being depleted sooner (2032) than thought in 1983, even that was built up by payroll tax, not borrowed money. “
O’Malley then argued, “An utter devaluation of the dollar — which Trump is causing and risking in so many reckless and self/serving ways (bitcoin), would be really bad for everything in US including Soc Sec, it is not true that Social Security depends on deficit spending for its support or benefits. (Except a small portion of admin expenses).”