The Bahnsen Group founder David Bahnsen appeared on ‘Kudlow’ saying President Donald Trump’s economic policies are driving the federal deficit to a record $1.8 trillion in the first ten months of fiscal 2026.
Deficit reduction could ease household affordability
A new analysis from the nonpartisan Committee for a Responsible Federal Budget (CRFB) says cutting the roughly $2 trillion deficit would lower inflation, reduce interest rates and ease cost pressures on American households.
CRFB warned that expansionary fiscal measures—subsidies, tax cuts or spending financed by borrowing—would only worsen affordability by stoking inflation and lifting borrowing costs.
The group explained two ways deficit reduction lowers interest rates: it eases inflationary pressure, allowing the Federal Reserve to cut short‑term rates, and it shrinks the Treasury’s debt stock, reducing the yields it must offer on long‑term bonds.
Every 1 percentage point drop in the debt‑to‑GDP ratio cuts interest rates by about 2 basis points, according to CBO estimates, meaning current rates sit roughly 1.5 points higher than they would have been if the ratio remained at 2001 levels.
Healthcare reforms targeting Medicare and Medicaid drug prices, overpayments and provider payments could lower premiums and out‑of‑pocket costs for seniors, CRFB noted.
Reducing the deficit also encourages private investment; CBO estimates that each dollar of federal borrowing crowds out about 33 cents of private spending, limiting productivity‑boosting capital formation.
Stabilizing debt as a share of GDP would raise real per‑person income growth by 0.1 over the next three decades, or 44 % more than a scenario with rising debt, CBO found.
Social Security solvency and future risks
CRFB said that cutting the deficit would halve the 75‑year Social Security shortfall, preserving benefits and avoiding an automatic 22 % cut—about $500 per month—when trust funds deplete around 2032.
Lower deficits give the government flexibility to respond to recessions, preventing affordability crises driven by unemployment spikes and heightened demand for relief programs.
“Responsible deficit reduction is one of the most powerful levers to make daily life more affordable for American families,” CRFB concluded.
