Bloomberg Warns of U.S. Debt Default

Plus, The Editors live video tomorrow at noon on Ukraine peace and U.S. interests

A yard sign for Mike Bloomberg’s 2020 presidential campaign.

The former mayor of New York City, Michael Bloomberg, who knows something about bond markets, has a sizzling opinion piece out warning that “America is headed for a grim fiscal reckoning.”

“Amid all the blaring headlines coming out of Washington, here’s a piece of news that is getting far too little attention: The US is on course for fiscal breakdown,” Bloomberg writes in a piece published on the Bloomberg Opinion platform that he owns.

“The federal government is currently spending roughly $7 trillion and collecting only $5 trillion in taxes annually. The resulting deficit is a little over 6% of gross domestic product, a disturbingly high number for an economy around full employment,” he says. “At some point, long before the debt reaches stratospheric heights, financial markets — if not voters — will say enough is enough. Bond prices will collapse, long-term interest rates will spike and the government will default — either explicitly or behind the cloak of surging inflation.”

Bloomberg calls on Congress and the Trump administration to “get serious about deficit reduction.”

Commerce Secretary Howard Lutnick has been out talking about this: “Our objective is during President Trump's term, over the next four years, we are going to try to balance the budget. The sooner we balance that budget, the more we can all enjoy the possibilities that exist under Donald Trump's presidency.”

And President Trump, in his March 4, 2025 address to a Joint Session of Congress, said, “in the near future, I want to do what has not been done in 24 years: balance the federal budget. We’re going to balance it.”

Bloomberg’s preferred solution is raising taxes, which is not my preferred approach. I think Bloomberg is correct to call attention to the problem, however. Faster growth and lower interest rates would help a lot. But the gold price is sending a warning signal.

[Program note: We are planning a “live” video event—the third ever for The Editors—tomorrow, April 3, at noon eastern time with some of the participants in the forum on Can Trump Broker a Ukraine Peace?, including David P. Goldman, Dominic Green, and Tamar Jacoby.

The information for the event is here:

Join Zoom Meeting

https://us06web.zoom.us/j/89580375666?pwd=VaUPvkerJhBpkEpdLmeX9qkeTpxr8P.1

Meeting ID: 895 8037 5666

Passcode: 083560

I’m hoping to make the video recording available afterward, so if you can’t make it at noon tomorrow, don’t stress about it, but if you can make it, please do join us. It should be fun.]

Newsmax IPO: Speaking of market signals, conservative publisher and television company Newsmax (NMAX)—which for some years was a customer of my column—had an initial public offering this week that had an astounding post-offering pop.