The Late Night Pour | Stealth Tax
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| THURSDAY, OCTOBER 8, 2026 · DAY 223 |
| The Late Night Pour |
Stealth Tax
Day 223. No matter what anyone wants out of this war, the tab is running. And it’s running fast and high.
The Congressional Budget Office (CBO) closed the books on the fiscal year Thursday. The deficit was $2T. Interest on the debt came to $1.14T, a record. That’s $3.1B a day, and $227B more than the military cost in a year with a war in it. (CBO · Monthly Budget Review, Oct 8)
Three nights earlier the Treasury secretary told a business dinner in Hershey, Pennsylvania, that the debt curve is about to bend, and “very, very quickly.” (BBH · Bessent, Oct 5; CBS 21 · Chamber dinner)
The Treasury secretary, Monday “What is important is the debt-to-GDP, and we will start bending that curve and bringing it down … I think it could happen very, very quickly.” Scott Bessent at the Pennsylvania Chamber of Business and Industry dinner, Oct 5, as quoted by Brown Brothers Harriman. Read the BBH note |
Nobody’s been asked to pay for the war. The Pentagon’s count was $11.3B after six days, $25B by late April, $37.5B in July and $43.6B by Sept 3. It lists $32.4B of that as unfunded: munitions and aircraft it hasn’t been given the money to replace. CBO adds $2B to $3B a month. The White House asked Congress for $87.6B in June. Congress hasn’t passed it. Asked in March whether taxes would rise to cover the war, Scott Bessent said they wouldn’t. “We have plenty of money to fund this war.” (New York Times via Fox · First six days; Air & Space Forces · April 29; Roll Call · Pentagon ledger, Sept 18; CSIS · Supplemental request; Reuters · Bessent, March 22)
That’s how the last ones were paid for too. Brown University’s Costs of War project puts the wars since 9/11 at about $8T through 2022, counting veterans’ care still owed. They ran through four presidents, two from each party. There was no war tax and no bond drive. Of that total, $1.1T is interest. The first of those wars began 25 years ago Wednesday. The debt was $5.8T then. It’s $40.3T now. (Brown · Costs of War; Treasury · Historical debt; Treasury · Debt to the Penny)
Niall Ferguson, a historian at the Hoover Institution, has a rule for this. A great power that spends more on debt service than on defense risks ceasing to be one. Habsburg Spain crossed that line. So did Bourbon France, the Ottomans and Britain between the wars. America crossed it in 2024. This year, with a war on, it wasn’t close. The lenders have noticed. This week the 10-year Treasury yield hit its highest since 2002. About $9.2T of the debt is owed abroad. (Hoover · Ferguson’s Law; Treasury · Daily yields; Treasury · Foreign holders)
A debt this size gets carried one of three ways: tax for it, cut for it or let prices shrink it. The debt grew 6.4% in the past year. That’s $6.6B a day. For the curve to bend, the economy has to grow faster than that, counted in dollars. Give Bessent the 3% real growth he says the economy can sustain. Give the Federal Reserve the 2% inflation it voted 12-0 last month to get back to. That’s 5%. The other 1.4 points have to come from taxes, spending or prices. (Treasury · Debt to the Penny; Federal Reserve · Sept 16 statement)
The first two take a vote. The third doesn’t, and it’s already doing the work. Over the past year the economy grew 6.3% in dollars, nearly matching the debt. In goods and services it grew 2.2%. The rest was prices. (BEA · GDP in dollars; BEA · Real GDP)
It’s been done before. In World War II, 85M Americans bought war bonds, $18.75 in and $25 back after 10 years. When a 1942 bond came due, the $25 bought about what $15 had. From 1946 to 1955 the debt went from 119% of GDP to 64% without being paid down. Growth did part of that. Prices did the rest. (USHMM · War bonds; BLS · Consumer prices; Treasury · Historical debt; FRED · Debt to GDP)
Today it’s collected from people who are paid in dollars and save in dollars. Real hourly earnings fell 0.3% over the year to August. Lenders can raise their price. A paycheck can’t. (BLS · Real earnings)
I’d love to go back to debating tax policy. Who should pay more, who should pay less. That argument assumes somebody gets a bill. For 25 years, under both parties and now in another war, nobody has.
Mr. Secretary: who pays for this one?
Somebody already is. It just isn’t called a tax.
Trump Rules Out Striking Iran Before the Midterms; The Blockade Stays
Day 223. The president posted Thursday that “we will not be attacking Iran at any time prior to the midterm elections to be held in the United States on November 3,” called the talks “productive” and said the blockade of the Strait of Hormuz stays in “full force.” The post followed US media reports that Washington was preparing new military action before the vote. Foreign Minister Abbas Araghchi says Tehran is reviewing Washington’s reply to its seven-day plan and will answer “within the next few days.” A day earlier a tanker took several projectiles 51 nautical miles off northern Qatar, with casualties aboard and nobody claiming it. Crude rose on the strike reports and gave back part of the gain after the post; the Markets page carries the settle.
| The pledge: no attack “at any time prior to the midterm elections” on Nov 3 · Trump, Truth Social, Oct 8 |
| The blockade: stays in “full force” · same post |
| Tehran: reviewing the US reply to its seven-day plan, answer “within the next few days” · Araghchi, Oct 8 |
| Moscow: Putin told Pezeshkian he’ll “do everything” to help end the war · Oct 8 |
| The tanker: the Antigua and Barbuda-flagged Acers, hit 51 nautical miles north of Madinat ash Shamal; casualties reported, no claim · UKMTO, Vanguard Tech |
| Sanctions: Treasury blacklisted 17 shadow-fleet tankers and the companies that own them · Oct 8 |
| Losses: at least 81 US aircraft and drones lost or damaged in the war · Congressional Research Service |
Riyadh Downs Two Missiles; Debris Hits a Kindergarten
The Saudi-led coalition said Thursday it intercepted two ballistic missiles headed for Riyadh and a third aimed at Khamis Mushait. Civil defence says fragments damaged a kindergarten and a medical clinic complex in the capital; it didn’t say whether anyone was hurt. Ansarallah says a missile hit King Khalid airport and warns that any aircraft in Saudi airspace outside Mecca and Medina is a target. Saudi aviation authorities count three killed and 36 wounded in the airport attacks. In Yemen, the government claims mountain positions in western Taiz, and the UN migration agency counts more than 200,000 displaced, up from 76,000 in mid-September.
Tech Slide Takes the Nasdaq Down 1.25 Percent as Yields Ease
The Nasdaq Composite fell 1.25 percent Thursday to 27,193.34 and the S&P 500 lost 0.47 percent to 7,765.36, a second straight decline for both. The Dow added 0.10 percent to 51,231.64. The 10-year Treasury yield eased to 5.23 percent, a day after touching its highest since April 2002. Oil did the steering again: crude jumped on reports of new strike plans for Iran, then gave part of it back when the president ruled out an attack before Nov 3.
Drones Hit Eritrean Troops Near Adigrat, a Monitor Says
The conflict monitor ACLED says Eritrean troops and ammunition in the Adigrat area took multiple drone strikes overnight into Thursday, and attributes earlier strikes to Ethiopia’s military. Witnesses told AFP they saw destroyed Eritrean lorries. A government-allied commander in Mekelle says Eritrean personnel entered Adigrat on Tuesday and Idaga Hamus on Wednesday; AP couldn’t verify that, and Asmara won’t confirm or deny a crossing. The TPLF pulled out of Shire on Wednesday, three days after government-allied fighters entered Mekelle, where police and the mayor’s office were still shut Thursday.
Russia Calls the Second Plague Case Fake; WHO Still Has No Cause
Rospotrebnadzor, Russia’s health watchdog, on Thursday rejected reports that a second person fell ill after contact with the Irkutsk plague-institute worker who died Oct 2. It says extensive testing found none of the pathogens she handled, that she’d been vaccinated, and that no plague case is registered in the region. WHO’s Maria Van Kerkhove says the agency still doesn’t know what killed her and has asked Moscow for details on the pneumonia and on the reported second employee. AP notes Russian state media have largely avoided the story.
Anne Carson Takes the Literature Nobel for Bending Genres
The Swedish Academy gave Thursday’s literature prize to the Canadian poet, essayist and translator, 76, “for her bold and inventive oeuvre that, in playful dialogue with the classical tradition, has created new forms for contemporary literature.” Carson is the 19th woman to win it; her 1998 verse novel Autobiography of Red, which retells a Greek monster as a boy, is the book most often named as her best. The award carries 12 million Swedish kronor, about €1.07M.
Klickitat County Weighs 5,655 Megawatts for 24,000 People
At least six hyperscale data centers are proposed in the rural county, asking Bonneville and Klickitat PUD for up to 5,655.5MW, enough for about six million homes, in a county of roughly 24,000. Only Blue Owl Capital’s 160MW smelter site near Goldendale has a Bonneville agreement. A six-month moratorium died for want of a second on Sep 8, and a draft ordinance covering anything 20MW or larger, with a one-mile setback from homes, could reach the commission Oct 20.
Bosa Sits Again for the 49ers; Guardians Force a Game 5
Nick Bosa (knee, calf) sat out a second straight 49ers practice Thursday and Mike Evans (ribs) didn’t practice either; Christian McCaffrey returned in full. Seattle, 3–1, held out Leonard Williams (ankle) after a limited Wednesday, and Jaxon Smith-Njigba practiced fully. Kickoff is Sunday at 1:25 PM PT at Lumen Field. The Kraken, 2–2–0, play Friday in Detroit. In the American League, Cleveland beat the White Sox 9–5 in Chicago to even their series at 2–2; Game 5 is Saturday in Cleveland, and the winner gets Tampa Bay.
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