The conclusion of the 2026 midterm elections has removed campaign ads from television screens. The financial implications, however, remain significant.
The projected cost of these midterms reached $11.9 billion, setting a new record for midterm election spending. This figure starkly contrasts with the $2.9 billion allocated by the EPA in May for replacing lead pipes, underlining the massive expenditure on political campaigning compared to infrastructure investment.
As winners emerge from these elections, they face the challenge of addressing the cost of living problems they debated during their campaigns. Yet, Washington has consistently struggled to adhere to the notion that a budget represents a promise to the future.
Congress is set to reconvene on November 9 for a lame-duck session, with government funding deadline looming on December 11. Historically, debt-laden traders in 1761 London were referred to as ‘lame ducks’ when defaulting on their debts. Similarly, the U.S. government has experienced 25 consecutive years of deficit spending.
The fiscal year 2026 culminated with a staggering $1.99 trillion deficit. Interest payments on this debt exceeded $1 trillion, surpassing defense spending, with only Social Security and Medicare costing more. These interest payments accounted for 19 percent of all federal revenue, emphasizing the burden on national finances.
The principal loan payments are theoretically addressed through further borrowing, driving the national debt above $40 trillion. This results in taxpayers effectively paying interest without reducing the principal, which undermines governance.
Excessive government spending is not confined to a single political party. Both Republicans and Democrats contribute to the spending issues. The solution lies in fiscal restraint coupled with economic growth.
Positive signs of growth are emerging; the Bureau of Economic Analysis reports foreign investments in U.S. businesses rose by 49.5 percent to $232.2 billion in 2025. Notably, $121.8 billion went to manufacturing, with Japan as the largest investor at $50.5 billion. This investment broadens the tax base, though economists debate the attribution of credit.
Despite promises from political parties to alleviate living costs, the $1.9 trillion American Rescue Plan, implemented in March 2021, influenced inflation. The San Francisco Fed estimated this plan added 0.3 percentage points to inflation annually through 2022, though other economists believe the impact ranged from 2 to 3 points.
In California, cost-related policies have added burdens. The 12-cent gas tax increase implemented in November 2017 and additional low-carbon fuel standard costs increased local gas prices. Currently, the average gas price is $5.94 compared to the national average of $4.22.
Moreover, the $20 fast-food wage hike in California led to a 3.3-3.6 percent rise in restaurant prices in metropolitan areas. Local budgets are impacted by federal border policies, according to the Congressional Budget Office. The immigration surge from 2021 cost state and local governments a net $9.2 billion in 2023.
Thomas Sowell’s view that policy has tradeoffs is aptly applied here. Each government program cost reflects a choice impacting families nationwide. The Declaration of Independence emphasizes that government power derives from consent. Many citizens have not consented to overwhelming interest payments.
While critics argue spending cuts affect vulnerable populations, it’s crucial to reevaluate priorities. Interest payments offer no tangible benefits and reduce funding availability for desired programs.
Current projections by the Congressional Budget Office suggest net interest payments might reach nearly $2.5 trillion annually by 2036. The urgency for Congress to act is clear, especially given the post-election dynamics.
Recommendations include securing full-year appropriations at current levels without ancillary spending, enforcing spending caps, and requiring clarity on funding sources for new programs. Congress should reflect household and business financial discipline.
The nation observed $11.9 billion spent on campaign ads; there is potential to apply similar resolve toward managing fiscal affairs. Future generations depend on present efforts to confront this difficult but essential task.
Jay Rogers brings over 30 years of expertise in financial services across private equity, credit, hedge funds, and wealth management. His experience underlines the pressing need for fiscal prudence.
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