Markets Should Be Worried About US Budget Deficit, Millstein Says

Government Shutdown & Fiscal Policy - The White House is considering across-the-board layoffs, potentially using the government shutdown as an excuse [1] - The current economic fragility amplifies the impact of government shutdowns [2] - The Republican Party's commitment to shrinking the federal government is questionable, given deferred resignations [3] - The administration's threats of mass firings may be limited by civil service reforms enacted 130 years ago [4][5] Trade & Tariffs - The President has allegedly made several undocumented trade deals with major countries, relying on press releases rather than formal agreements [7] - The Court of International Trade and the D C District Court have challenged the President's authority to impose tariffs [8] - The Supreme Court will hear a case on November 5th that could potentially dismantle the current tariff regime [8] - The bond market's reaction to tariff news has shifted from inflation concerns to deficit reduction needs [10] Deficit & Debt - In 2025, the US is projected to run a $17 trillion deficit, approximately 6% of GDP [11] - Tariffs are claimed to generate $300 billion in revenue in 2026, potentially offsetting tax cuts, but not closing the deficit significantly [12] - The current level of debt is sustainable, but the ongoing deficits are not [13]