US Fiscal & DOGE
◆ What's Happening
The US fiscal trajectory is deteriorating despite headline noise about spending cuts. The national debt stands at $38.56 trillion, with the CBO projecting a $1.9 trillion FY2026 deficit (5.8% of GDP) and cumulative deficits of $24.4 trillion over the next decade. For the first time in history, net interest payments are crossing $1 trillion annually — projected to reach $2.1 trillion by 2036 — making debt service the single largest line item in the federal budget, ahead of defense and Medicare.
DOGE (Department of Government Efficiency) has been a workforce story, not a spending story. Approximately 350,000 federal employees have exited — the largest peacetime workforce reduction on record — but total federal spending has not decreased year-over-year. DOGE claims ~$215 billion in savings; independent analyses range from disputed to negative (CBS puts it at a $135 billion net cost). The original $2 trillion target was revised to $1 trillion, then to $150 billion. The "Trump Accounts" rule now mandates real-time, granular spending transparency across all agencies.
The One Big Beautiful Bill Act (OBBBA), signed July 2025, added ~$4.1 trillion in new borrowing through 2034 ($5.9T in tax cuts/spending offset by $2.5T in revenue and $700B+ in interest costs). The debt ceiling was raised to $41.1 trillion with ~$2.5 trillion of headroom, projected to be exhausted around November 2026. Two major catalysts loom: the Supreme Court tariff ruling (after Feb 20 recess) could eliminate ~$3 trillion in deficit offsets, and the next debt ceiling fight is a late-2026 event.
📈 Bull Case
DOGE efficiency gains materialize in FY2027 budgets, demonstrating that structural spending reform is possible. Defense budget (+13%) drives revenue for primes. Bond market remains "anchored" with the 10-year at ~4.1-4.2%, allowing the deficit to be financed at manageable rates. Government contractor modernization spending (IT, cybersecurity, cloud) grows even as headcount shrinks. The tariff ruling upholds IEEPA authority, maintaining $3T in revenue offsets.
📉 Bear Case
Supreme Court strikes down tariff authority, blowing a $3T hole in deficit projections and sending bond yields spiking. Debt ceiling fight in late 2026 triggers a repeat of the 2011 downgrade scenario. Rising interest costs crowd out discretionary spending, hitting defense and infrastructure budgets. DOGE disruption causes operational failures in critical government systems (DISA nuclear command connectivity already flagged as "extreme risk"). Government contractor cancellations cascade beyond consulting into hardware.
◆ Fiscal Exposure
35 stocks across 3 categories. Tap a category to expand.
📋 Also Impacted — scored for this event but uncategorized
Defense connector business tied to military spending. Government infrastructure projects. Diversified exposure across multiple fiscal vectors.
Clean energy ITC for fuel cells preserved in OBBBA. Some government facility deployments. Fiscal support for distributed energy generation.
Clean energy credits provide some fiscal tailwind. Mostly insulated from federal spending changes as a merchant power producer.
Some government/defense electrical infrastructure contracts. IRA and grid spending provide fiscal tailwind. Aerospace segment tied to defense budgets.
Benefits from IRA/OBBBA energy spending. Nuclear services segment tied to government policy. Grid modernization has bipartisan support.
Nuclear PTC preserved in OBBBA. Regulated utility model means rate recovery for capital investments. Infrastructure spending tailwind for gas pipeline.
Indirect fiscal exposure through infrastructure spending on power plants and grid modernization. Minor government contracts.
CHIPS Act beneficiary for US fab expansion. Minor fiscal exposure.
CHIPS Act beneficiary through semiconductor equipment customers building US fabs. Minor indirect fiscal exposure.
🛡️ At Risk — negative exposure to this event
OBBBA ended EV credits Sept 2025. Musk/DOGE political association creates brand risk and regulatory uncertainty. Government fleet contracts possible but politically charged.
DOJ antitrust still a headwind. Government cloud contracts are growing but small vs advertising revenue.
◆ Catalyst Calendar
💡 Cross-Event Note
US fiscal policy intersects everything. Rising bond yields from deficit fears would tighten financial conditions, hurting rate-sensitive AI capex and energy grid investments. Defense spending is the direct link to the Iran conflict event — the $961.6B defense budget and Golden Dome missile shield are fiscal commitments driven by geopolitical necessity. If DOGE cuts hit defense IT (already flagged at DISA), it could paradoxically increase spending later to fix the damage.