'UNSUSTAINABLE': Economist warns over US fiscal trajectory as 2026 deficit nears $2T

• The Congressional Budget Office (CBO) estimates the U.S. budget deficit will reach nearly $2 trillion in fiscal year 2026, a 12% increase from 2025.
• Entitlement spending (Social Security, Medicare, and Medicaid) and net interest payments on the federal debt are the primary drivers, with interest payments now exceeding defense spending.
• There is a perceived lack of political incentive for fiscal responsibility, leading to an unsustainable trajectory for government spending.
• AI companies' valuations are currently driven by future potential and investor 'hope' rather than immediate revenue, with a historical parallel to US Steel's early days.

The discussion centers on the U.S. budget deficit, projected to near $2 trillion in fiscal year 2026, driven by entitlement spending and rising interest payments that now surpass defense spending, which is deemed unsustainable. Analysts express concern over the lack of fiscal discipline across both political parties. Separately, the conversation touches on AI companies like OpenAI, whose valuations are largely based on future potential rather than current revenue, akin to a 'bag of hope' for investors.