Get the latest on Washington's budget battles and more with The Fiscal Times email newsletter every weekday. Sign up today.

⇓ Scroll to read more ⇓

Trump to Use $130 Million Anonymous Donation to Help Pay Troops

By Yuval Rosenberg and Michael Rainey

Friday, October 24, 2025

Good evening. It's Day 24 of the government shutdown, and hundreds of thousands of federal workers missed their first full paychecks today while Congress was out. Speaker Mike Johnson announced that House members will be home again next week, a sixth straight week that those lawmakers aren't at the Capitol. The last House vote was on September 19.

A new report also showed that those government workers going without pay - and the rest of us - are dealing with annual inflation that has climbed to the highest level in eight months. Here's what you need to know heading into the weekend.

Trump to Use $130 Million Donation from a Friend to Help Pay Troops

The Trump administration has accepted a $130 million donation from an anonymous private donor and will use the funds to help pay troops during the government shutdown.

The president on Thursday night said at a White House event that the donor was a friend and a "patriot" but declined to name him.

The donation won't go very far in covering the salaries of service members. With more than 1.3 million active-duty troops, the donation works out to about $100 per person. Todd Harrison, a defense budget analyst at the American Enterprise Institute, told Politico that the donation will cover about one-third of one day's pay for the military.

At the same time, the money also raises additional legal and ethical concerns.

"The move to pay the troops with private donations is highly unusual and a potential violation of the Antideficiency Act, which prohibits federal agencies from spending money in excess of congressional appropriations or from accepting voluntary services," The New York Times notes.

William Hoagland, a former Senate GOP budget aide who is now a senior vice president at the Bipartisan Policy Center, told CNN that the law may allow the administration to accept the donation but it is "very clear" that the money can't be used to pay the troops. "The Antideficiency Act is explicit that private donations cannot be used to offset a lapse in appropriations," Hoagland said.

CNN's Adam Cancryn added that the administration hadn't provided key details about the donation: "In response to questions about the donor's identity and whether they have any ties to foreign entities or interests, a White House spokeswoman referred questions to the Pentagon and Treasury. The Pentagon then referred those questions back to the White House. Treasury did not immediately respond to request for comment."

Trump Says He 'Terminated' Trade Talks With Canada

President Trump said Thursday night that he is abruptly ending trade talks with Canada because of a video advertisement, paid for by the province of Ontario, that shows former President Ronald Reagan criticizing tariffs.

"Over the long run, such trade barriers hurt every American worker and consumer," Reagan says in the ad, which uses audio and video from a 1987 radio address by the former president.

Trump blasted the ad, claiming in a social media post that the ad was "fake" and that it was made to interfere with an upcoming Supreme Court decision on the legality of many of the tariffs imposed by the president. "Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED," he wrote.

Trump also pointed to a statement by the Ronald Reagan Presidential Foundation that said the ad "misrepresents" the Reagan address and uses "selective" sections. The quotes included come from different sections of Reagan's speech and are presented in a different order than they were spoken, but they match the original text.

Trump also claimed in a social media post Friday that Reagan "LOVED TARIFFS FOR OUR COUNTRY, AND ITS NATIONAL SECURITY" - a claim that itself misrepresents the former president's views.

Trump administration officials said the decision reflects frustrations with Canada's negotiating stance that go beyond just one ad. Those ongoing tensions and Trump's new announcement leave the state of U.S. relations with Canada, its second largest trading partner, mired in uncertainty. "We stand ready to pick up on those discussions when the Americans are ready," Canadian Prime Minister Mark Carney told reporters before leaving for a summit in Malaysia.

Carney has said that Canada's old relationship with the United States "is over" and "will never again be the same as it was." He has emphasized developing trade relationships with new partners and set a goal this week of doubling Canada's non-U.S. exports over the next decade.

In the meantime, Ontario Premier Doug Ford said the ad that offended Trump will soon be taken down. "Our intention was always to initiate a conversation about the kind of economy that Americans want to build and the impact of tariffs on workers and businesses," Ford said. "We've achieved our goal, having reached U.S. audiences at the highest levels."

Quote of the Day

"If it's not too late, it's damn close."

‒ GOP Rep. Jeff Van Drew of New Jersey, in a Politico piece describing how "Republicans are barreling toward the upcoming Obamacare enrollment period without a unified plan to address the sticker shock that millions of Americans are likely to experience due to the expiration of key federal subsidies."

The November 1 start to open enrollment for Affordable Care Act plans is just over a week away and, as Politico reports, Republicans have yet to unify behind any plan to address the looming expiration of more generous Obamacare subsidies, which is expected to leave millions of Americans facing sharply higher premiums that will be simply unaffordable for many. "The lack of direction comes from the top," Politico's Alex Gangitano, Meredith Lee Hill, Mia McCarthy and Myah Ward write, "with President Donald Trump not providing clear guidance to his party on how he wants to deal with the expiring subsidies."

An extension of those subsidies has been Democrats' primary demand in the ongoing government shutdown, but Republican leaders have insisted that any negotiations on the issue will happen only after federal agencies are reopened. The White House and some Republicans reportedly also question why they should step in to extend subsidies for a Democratic program they have long criticized.

In an appearance on CNN this week, House Speaker Mike Johnson was asked whether Republicans would have a plan to address the expiring subsidies if the government reopened right away. "Yeah," Johnson said. "We can have that ready immediately."

But Johnson indicated that Republicans have proposals rather than a concrete plan. "Because here's the thing: We work in a deliberative public body, and we have hundreds of members. It's a very complicated, very complex issue that requires a long time to build consensus around. We have ideas on the table, and the process of the legislative body is to build consensus around it."

That process may be going on behind the scenes, but building consensus among Republicans on healthcare reforms has long proven to be a challenge. In the meantime, both chambers of Congress were out today, and Trump is leaving tonight for a week-long trip to Asia, so the government shutdown will continue into next week without any real sign that the two parties are making progress toward a resolution.

Inflation Edges Higher, but Not as Much as Feared

The annual rate of inflation inched up to 3% in September, the Labor Department reported on Friday, but the tenth-of-a-percentage-point increase over last month's reading was less than expected, boosting confidence that the Federal Reserve will cut interest rates again at its next meeting on October 28-29.

A measure of core inflation - which leaves out volatile food and fuel prices - also came in at 3.0% in September, easing slightly from the month before. Analysts had expected to see both overall and core inflation rates register 3.1% in September.

On a month-over-month basis, the consumer price index rose 0.3%, below expectations. The monthly reading for core inflation was 0.2%, down a tenth of a percentage point from August.

Shutdown delay: The September report was more than a week late due to the government shutdown, and there was a chance it wouldn't be released at all with most federal employees on furlough. But the September data was collected before government funding lapsed on October 1, and the Bureau of Labor Statistics called back some employees so that the report, which plays a role in determining the annual Social Security cost-of-living adjustment, could be released despite limited staffing.

The Trump administration said Friday that an inflation report for October probably won't be released, since data is not being collected during the month.

Tariffs in play: Although the inflation rate was better than expected in September, the annual inflation rate was the highest since January. Analysts say tariffs are playing a role, even if the elevated pricing pressure is not as bad as initially feared when President Trump began to roll out his tariff hikes earlier this year.

Significant price increases were seen in several tariff-affected categories, including apparel, where prices rose 0.7% on a monthly basis; furniture and bedding, up 0.9%; and sporting goods, which increased 1%. Overall, though, analysts say that U.S. companies continue to absorb much of the tariff costs, limiting price hikes and allowing the Fed to focus more on the state of the labor market for now.

"Tariff related inflation will remain a concern in the near term," James Knightley, chief international economist at ING, said in a note to clients, per The Wall Street Journal. "[B]ut it is the jobs market that is becoming the more pressing issue for the Fed with a clear chance that the 'low hire, low fire' economy becomes a 'no fire, lets fire' story."

Krishna Guha, vice chairman at Evercore ISI, said the latest inflation data support the view that tariffs will raise prices but not kick off a new inflationary wave. "Signs of spillovers from tariffs remain weak and support the view that tariff hikes will translate into a one-off bump in prices instead of persistent inflationary pressures," he said, per CNN.

Still, some economists continue to worry about inflation, which is rising while running well above the Fed's 2% target rate. Inflation "is looking way above target," said former Obama administration economist Jason Furman. "Financial conditions are easing. People are worried [about ]a bubble. You would not normally cut interest rates at a time like this."

Mark Zandi, chief economist at Moody's Analytics, warned that inflation will likely intensify. "Inflation is uncomfortably high and is set to accelerate further in the coming months," he told CNN. "Inflation is firmly above the Federal Reserve's direct, and the direction of travel is for even higher inflation going into next year."

A mixed experience: RSM Chief Economist Joseph Brusuelas said the September inflation report is a good reminder that the U.S. economy looks very different to people depending on where they are in a "K-shaped economy" that is very good for the wealthy and not so great for those below. Inflation is low enough to allow for rate cuts, which will boost asset values, but high enough to hurt consumers at the lower end of the income spectrum, Brusuelas said.

"Those who work and live in a world of low rates, liquidity and leverage will continue to prosper from the more dynamic portions of the American economy as rate cuts bolster equity prices, dampen yields and push firms back toward risk-on behavior," Brusuelas wrote in a research note. "But those who live and work on the lower spur of K may have a vastly different view of the economy. Look beneath the headline number and there are large annual increases in the cost of food, meat, housing and utilities. Middle class and down-market households experiencing slowing wage growth are having difficulty adjusting to persisting increases in the cost of living."

Social Security Gets a 2.8% Boost in 2026

Americans receiving Social Security benefits will see a 2.8% increase in their monthly checks next year, the Social Security Administration announced Friday.

The annual cost-of-living adjustment, known as COLA, is a bit bigger than the 2.5% bump provided last year, but smaller than the three years before that, when pandemic era inflation prompted upward adjustments of 5.9% in 2021, 8.7% in 2022 and 3.2% in 2023.

The adjustment will affect nearly 71 million people who receive Social Security retirement benefits and nearly 7.5 million people who receive Supplemental Security Income payments. (Some people receive benefits from both programs, and the SSA puts the total number of beneficiaries at 75 million.)

The maximum amount of income subject to Social Security taxes will increase in 2026, as well, rising to $184,500 from $176,100.

Is it enough? The average monthly payment will rise about $56 to $2,071, but some of the increase will get gobbled up by an expected increase in Medicare Part B premiums, which is scheduled to be announced next month.

More broadly, some Social Security advocates say COLA adjustments aren't keeping pace with inflation, especially when it comes to the ever-rising cost of healthcare. According to the Senior Citizens League, Social Security recipients lost 20% of their purchasing power between 2010 and 2024, and would need a boost of more than $350 per month to get back to where they were 15 years ago.