Tim Whelan

Dad, husband, health, tech, sailor, skier, investor, food.
Learning by doing, messing up included. Come join the adventure.

[Tim Whelan @TimWhelan20]

Time for my yearly look at the Federal budget. I see the budget as the US's largest problem by far. If the federal government continues deficit spending, the Federal Reserve will need to continue printing money. Printing money causes inflation. Inflation causes all sorts of problems, arguably the biggest is that the rich become richer and the poor become poorer. This creates a huge divide in our country. Additionally, interest expense continues to swell as a line item, and reduces ways the government can spend (or reduce taxes) to positively help citizens. If that wasn't enough, if it continues long enough, eventually the country will be broke (if we aren't already).

All told, I'm cautiously optimistic about the FY25 budget results. The deficit is slightly DOWN versus FY24. Admittedly, a $41B decrease isn't huge, and we're still adding to the debt, but it's a move in the right direction. This was done despite seeing Social Security/Medicare go up by $243B, and interest expense on the debt go up by $89B.

How did Trump and Bessent do it? Primarily by increasing tax receipts, and decreasing spend on the Department of Education. The tariffs are clearly visible bringing $118B more in tax receipts, and generally good economic activity lead to higher taxes paid by individuals. Think of it this way... if inflation is running roughly 3%, many people are getting 3-5% COLA raises which drives higher tax receipts. We all heard Trump talk about downsizing the Department of Education. Well, it looks like he did it... you can see the spend is down $234B.

Social Security and Medicare are not controllable expenses by the executive branch. These expenses will continue to rise as the Boomers continue to retire, and will continue to put pressure on the federal budget. Interest on the debt is frightening and clearly unsustainable. I'm sure it will easily surpass spending on Health in FY26 and be the third biggest budget category. The average interest rate on the debt for FY25 was 2.64% (~$970B/38T), an increase over last year's 2.55%. I'm a big fan of Scott Bessent, and it will be interesting to see how he approaches refinancing all the maturing debt.

If you enjoyed this post, you might also enjoy last years Federal budget post where I go into some more basics. Note, I changed data sources this year so the FY24 numbers/categories changed a bit.
https://t.co/qMQdMaCa9m

[Tim Whelan @TimWhelan20]

Given that DOGE is coming, I thought I'd try and simplify our national deficit & debt. The table below summarizes the fiscal 2024 federal budget (in billions). This table is compiled from data from the CBO.
<<A THREAD>>

[Tim Whelan @TimWhelan20]

@Strong_Old_Men @SageOfTheMtn TY-I'm in! Might take me a while to get started, but I'm doing it.

[Tim Whelan @TimWhelan20]

@BoomerDivvies No. Extremely unlikely!

[Tim Whelan @TimWhelan20]

@davepl1968 Omg. I need to up my pegboard game. I just went off and googled how to route zip ties through pegboard. Is there some sort of magic to bolting/screwing the bigger objects on to the pegboard?

[Tim Whelan @TimWhelan20]

@RoaringHammy Totally! We've taken a Waymo and been driven around in a Tesla with FSD on full time. Both were superb. It's the future!

[Tim Whelan @TimWhelan20]

@airmainengineer I'm not a pilot, but definitely go around. That bounce wasn't remotely textbook, and if it aint textbook, go around.

[Tim Whelan @TimWhelan20]

@dgsommersmkts That is the truth for sure!

[Tim Whelan @TimWhelan20]

@mikepat711 We were in Palo Alto this last week. The number of Waymos actively on the road doing business was crazy. I'm much more fan of Tesla's solution, but boy did it give me faith that self driving is COMING!

[Tim Whelan @TimWhelan20]

@runquasimodo Well put! Learning to truly look in the mirror is hard to do.

[Tim Whelan @TimWhelan20]

@mikepat711 @jtesla47 Pretty frickin’ cool!!

[Tim Whelan @TimWhelan20]

@ThorTorrens Quitting refined sugar is harder than quitting coffee

[Tim Whelan @TimWhelan20]

@runquasimodo So true. The work is the reward.

[Tim Whelan @TimWhelan20]

@oklesdokles @CoachDanGo He didn’t say he did cocaine. He compared its effect to that of cocaine.

[Tim Whelan @TimWhelan20]

@bscholl I hope behind the scenes we are pivoting to weapons that are saturation/swarm based, and individually less expensive. It seems our weaponry is too expensive to risk losing... both in terms of dollar cost and the cost of human life.

[Tim Whelan @TimWhelan20]

@Andercot Interesting topic! American culture is a bit of a circus show. Some of it I Iove, other parts are a bit trashy. I do think our system (democracy/capitalism) is one of the better systems in the world.

[Tim Whelan @TimWhelan20]

@Andercot @litcapital This is an interesting theory. I like it a lot, although I know some extremely financially literate people who are very leftist leaning.

[Tim Whelan @TimWhelan20]

@RetiredYoungNW @CharlesSchwab I'm on Schwab too. I just saw a trade come through for 6% of what I was "affirmed", but "allocated" still says "-".

[Tim Whelan @TimWhelan20]

Quarterly or yearly profitability isn't a good measure in these type of capital intensive projects. Starlink was "unprofitable" for many years, but now it is immensely profitable. Amazon was unprofitable for almost a decade. Starship is "unprofitable" now as they are in development, but will be very profitable once it is fully operational.

[Tim Whelan @TimWhelan20]

@alexboge Great analysis. Although my guess is this was all intentional for engagement. And he hit the mother lode!