Bessent Says Trump May Speed Deficit Cut Plans if Democrats Win

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1. 5d ago

   Treasury Secretary Bessent Plans Fast Deficit Cuts if Democrats Win Congress

   Treasury Secretary Scott Bessent is preparing a deficit reduction plan to be passed within the year if Democrats retake Congress. This strategy aims to lower the budget deficit-to-GDP ratio as the 12-month rolling deficit reached 1.8 trillion dollars in August 2026. Recent fiscal pressure includes a July budget deficit that hit a record high, the highest monthly level since March 2021, driven partly by tariff refunds reducing revenue. These moves come as bond markets react to fiscal uncertainty and a smaller-than-expected debt buyback operation.

   Why it matters

   The U.S. budget deficit currently sits at 6 percent of GDP, a level Justin Wolfers notes is atypical outside of war or recession. Market volatility has increased due to President Trump's pledge of national cash payouts following a Republican mid-term victory. Treasury yields recently rose after the government repurchased fewer 10- to 20-year securities than the maximum amount allowed under Bessent's buyback program.

   What is confirmed

   • The 12-month rolling budget deficit reached 1.8 trillion dollars in August 2026.
   • The U.S. budget deficit hit its highest monthly level since March 2021 in July.
   • Treasury Secretary Scott Bessent is working to reduce the budget deficit-to-GDP ratio.
   • The U.S. government repurchased fewer 10- to 20-year securities than the maximum amount outlined in the expanded buyback program.

   Still unconfirmed

   • Bessent claims a deficit reduction plan will be passed within the year if Democrats retake Congress.
   • Tariff refunds contributed to the record July budget deficit.
   • The U.S. budget deficit is at 6 percent of GDP outside of a recession or war.

   What to watch next

   • Results of the mid-term elections regarding Congressional control
   • Outcome of the 30-year bond auction
   • Official release of the September budget review from the Congressional Budget Office
   Sources used for this update (15)

   1. Bloomberg.com — Bessent Says Trump May Speed Deficit Cut Plans if Democrats Win
   2. Forex Factory — US Treasury Secretary Bessent: We're working to get our budget deficit-to-GDP down
   3. Traders Union — Justin Wolfers: U.S. budget deficit at 6 percent of GDP outside recession or war
   4. mezha.net — US Budget Deficit Hits July Record as Tariff Refunds Cut Revenue
   5. dars.gov.et — US Budget Deficit Jumps in July to Highest Monthly Level Since March 2021 - Earnings Per Share
   6. Briefs Finance — Treasury Readies Lame-Duck Deficit Plan if Dems Flip
   7. 아시아경제 — Preparing for Democrats to Retake Congress... Bessent: “Deficit Reduction Plan to Be Passed Within the Year”
   8. Congressional Budget Office (.gov) — Monthly Budget Review: August 2026
   9. The Northern Virginia Daily — Commentary: Living on borrowed time?
   10. dars.gov.et — U.S. Budget Deficit Surges to Highest Monthly Level Since March 2021 as Fiscal-Year Red Ink Nears $1.8 Trillion - Profit Announcement
   11. Committee for a Responsible Federal Budget — 12-Month Rolling Deficit is $1.8 Trillion in August 2026-2026-09-09
   12. uk.finance.yahoo.com — Bessent Dismisses Concern on Buyback, Says Treasuries Are Strong
   confidence 90%