Trump Warns Economic Warfare For Aiding Iran, Federal Debt Grows, Venezuela Oil Deals

He wants allies to add pressure on Iran to end the stalemate in the state of Hormuz, but those allies live next door and are stuck with the fallout.

I'm Leila Falded, that's Sasha Feifer, and this is up first from NPR News.

The US national debt has topped $40 trillion.

“You have to think about the impact that we'll have on the interest payments.”

We are now spending more on interest than we spend on national defense. Experts say that higher debt is pushing up the cost of everything from mortgages to small business loans. And US oil companies are making new deals and Venezuela that comes eight months after US forces captured Nicholas Maduro, Venezuela's politics and its future remain uncertain. Stay with us, we'll give you the news you need to start your day.

Hey, you know that nagging voice in your head, the one telling you to put the phone down and stop doomsgrowing while it's time. Look up, take a daily curiosity break with shortwave and pair a science podcast. Let your mind wander to the edges of outer space or wonder about what's lurking in the depths of the sea floor all in under 15 minutes.

Shortwave, your daily mental recent, listen on the NPR app or wherever you get your podcasts.

This is Terry Gross. I just interviewed Jason Seagull about playing a therapist on a series shrinking his own therapy and his Muppets movie.

“I love how you call me the human star of the Muppets, it gives me such joy.”

Well, especially since you've said you sometimes feel like a Muppet, so... for sure. Listen on the NPR app or wherever you listen to fresh air. The NPR app cuts through the noise, bringing you local, national and global coverage. No paywalls, no profits, no nonsense.

Download it in your app store today. The war with Iran is in its sixth month and oil is still struggling to move through the straight of Hormuz. President Trump's tried bombing Iran into submission now he's pivoting to economic warfare. In a lengthy post he announced in all caps, quote, "the most crushing economic operation

ever taken against any country," and he called on allies to stand with the U.S. to unleash economic d-day, as he called it, on Iran. With us to talk about this, as NPR International correspondent, Aya Petra, we can morning Aya. Good morning.

So this crushing economic operation that Trump posted about, do we know what this would look like? I mean, more of the same sanctions, the existing blockade, and even more pressure now he's calling on allies around the world countries around the join him in this isolation of Iran. And we've seen maximum economic pressure before by President Trump, you'll recall this

was his policy the first time he was in office. But this is a step beyond because now there is that naval blockade in place, and it is blocking Iran from being able to export its oil. And this pivot from bombings to blockade comes as AAA says gas prices in the U.S. are up 30% on average from a year ago, so in many states, people are paying a dollar or more

per gallon than they were, diesel for trucks and jet-fueled flying are even higher. Now that is because of Iran's chokehold on the state of her most since the beginning of the war.

Windward maritime intelligence tracking says five million barrels of oil a day did exit

the state on average per day in July, but that is a fraction of the 20 million barrels that were going through before the war. And all that oil that had been pouring through was coming from Gulf Arab allies who depended on it for revenue for their economies yet they are now stuck with this stalemate and its consequences.

So what's the regional view on this? Right. So the Iranian and Gulf oil is not going through that straight freely right now. Well, Trump's approach with Iran has swung wildly in this war. We've heard him threatening to wipe out an entire civilization and then talking up a deal

with Iran. But now there is no deal and Trump says there are no talks with the Iranians. And there are differences of opinion among Gulf Arab allies about all of this. All-man, for example, which borders the straight of Hermuz and his holding talks with Iran about its future management, Trump has threatened to bomb that country.

All-man because of those talks which include possible tolls, that is despite all-man's history as a mediator between Washington and Tehran. Meanwhile, you have the United Arab Emirates, which this week took a step that aligns with Trump. The UAE halted all trade, commerce, and financial transactions with Iran after it says

two Iranian missiles were fired toward it. It fell in open waters, but Iran denies that attack. However, I spoke with Mohammed Bahrain, he runs the Dubai Public Policy Research Center in the UAE, and he backs Trump's current approach. Everyone have realized the limitation of military power.

“And I think now what the U.S. is trying to do is use the same weapon Iran is using against”

the world, which is economic sanctions. And he says that while the U.S. has really warled launched on Iran triggered all of this,

Attacking the world economy is not justifiable. Attacking other countries because you've been attacked by one country is not justifiable. And remember, the UAE has dealt with the brunt of Iranian missile and drones throughout the war. A.A. briefly, you said the UAE has halted all trade, commerce, and financial transactions

with Iran.

“Any sense if that will have real consequences for Iran?”

So the UAE was the biggest importer of Iranian goods worldwide in 2024. That's according to data from the World Trade Organization. And it is also a place where over the years the U.S. Treasury has sanctioned Iranian shell companies that are moving illicit money and trade through the UAE. But it is also a place that connects Iranians to the rest of the world, Dubai Airport is

a major transit hub that still has flights to and from Tehran. So the UAE is taking a step toward isolating Iran right now, but it has not yet cut off those flights, or it's ties all together.

So that leaves it room to maneuver with its powerful neighbor.

And that is the bind that these Gulf Arab allies are in. They have to deal with Iran even when Trump doesn't. That is in Paris, A.A.A. Batrawi, thank you, thanks. The U.S. government's debt has reached a new high or a new load, depending on your point of view.

Update from the Treasury Department on Wednesday said the federal debt had topped $40 trillion. This year alone, Washington is adding more than $2 trillion in red ink. And that's driving up interest expenses for the government and everyone else. And Paris Scott, Horsesley joins us to explain high Scott. Good morning, Sasha.

All right, Scott. We're not in a recession. We're not in a pandemic. Things like that might justify the debt, so why is the debt growing so fast? It's growing because the government is spending more than it takes in, by a pretty wide margin.

Last year, the GOP Congress voted to extend the 2017 tax cuts, so tax revenues growing more slowly than it otherwise would. The administration had hoped to offset some of that with the tariff revenue, but of course a lot of the President's tariffs were struck down by the Supreme Court.

So the government's actually had to refund more than $100 billion it collected.

And meantime, spending just keeps going up. You know, a lot of the increased spending is the result of our aging population, which drives up costs for things like Medicare. But Carolyn Bordeaux, who heads a deficit watchdog group called the Concord Coalition, says some of it's driven by the growth of the debt itself.

“The 40 trillion itself is just a number, but you have to think about the impact that that”

will have on the interest payments. We are now spending more on interest than we spend on national defense. It is one of the highest categories in terms of our expenditures, and it's one of the fastest growing. The government is spending more than a trillion dollars this year, just paying interest

on the debt. And that's about 15% more interest than the government had to pay last year. Yeah, and those growing interest payments are problematic. Explain what's behind the big jump in the interest payments. Well, it's partly because the debt itself has gotten so big.

When you carry a big balance on your credit card, the interest payments go up. But it's also because the people who lend the government money are demanding higher interest rates now. This week, the interest rate on a 30-year government bond was the highest spend in almost two decades.

And Bordeaux says that drives up borrowing costs for everyone else. Those interest rates are linked to everybody's mortgage payments. They're linked to small business loans. They're linked to the cost of living for Americans across the country. Morgadrates, for example, have climbed to about 6.7% and, of course, that's making it harder

for people who are trying to buy their first home. Very hard.

“What is there any movement of Washington to get control over this growing debt?”

Some members of Congress have started making noises about, you know, maybe setting up a fiscal commission of some sort. But those efforts don't seem to be getting a lot of traction so far. And let's face it. Most voters are not screaming that they want to pay higher taxes or see their own government

benefits cut. Maybe that will start to change as these borrowing costs continue to climb and become an even bigger drag on the U.S. economy. What's really remarkable about all this red ink is that it's coming at a time of relative prosperity.

You know, the government used to run big deficits in hard times, but then shrink those deficits relatively economy in good times. That's no longer the case. And Bordeaux says that raises the risk that the next time the country faces some big challenge, it may not have the fiscal flexibility would like.

One of the problems with running deficits at times like this is what do you do when you hit a really serious crisis? What do you do when you hit a recession? What happens if we have another pandemic? What happens if we have an international global crisis or war?

We don't have a lot of headroom to issue more debt. You know, the U.S. was fortunate during previous crises that it was able to borrow a lot

of money at relatively low cost, but we can't take it for granted that will always be

the case. And Pira Scott, Horsley. You're welcome.

This week, US oil company signed some of the first deals with Venezuela in close to two

decades.

“This comes eight months after the U.S. seized Venezuela and President Nicholas Maduro.”

Houston Public Media's energy reporter, Natalie Weber, has been reporting on this and she joins us from Houston, Good morning, Natalie. Good morning. So I recall that after the U.S. captured Maduro, oil companies were hesitant to get involved with Venezuela, but now they're involved.

Give us a sense of what's in these deals. Yeah, so the Dallas-based, Hunt oil company entered into a contract to expand the country's oil and gas production. And then SLB, formerly known as Slambray, a Houston oil field services company, also signed an agreement for a oil exploration in Venezuela.

And Venezuela's oil minister, Paula, and now announced the steel on state-run media. These deals were signed on Tuesday, while Venezuela leaders were in Houston for an energy conference. And I attended the conference in Houston, where I now spoke this week. She says the country has made changes to its laws that will make it easier for foreign

companies to invest in Venezuela. And also, "Elembitación" is OK. And so what she's saying right now is that the country's agreements with U.S. companies offer a chance to evaluate opportunities for investment in Venezuela. Now, at this time, we don't really know how much these deals are worth that hasn't been made

public yet.

“Natalie, could you give us some sense of the significance of these deals?”

Sure.

Well, these are some of the first major agreements between U.S. oil companies in Venezuela

since the Venezuelan government took control of foreign oil fields in 2007. The South American country has the world's largest proven oil reserves according to OPEC. James Chester is the CEO of Energy Capital and Power, which organized the Houston conference with Venezuela leaders this week. Here's what he said.

It's very significant that they're actually coming here. They're not waiting for people to come to Caracas. It's a tough time for Venezuela right now. The country needs billions of dollars to rebuild after a devastating earthquake killed thousands of people in June.

So the country needs money and soon. These contracts are a meaningful milestone after many oil corporations have kind of hesitated to get involved in Venezuela. That's a querning to Francisco Monaldi. He's the Director of Race University's Latin America Energy Program.

These could up and up a new wave of investment. Still, we have to wait and see if companies actually deploy their resources. So a lot of energy CEOs say it could take time and a lot of money to ramp up Venezuela's oil production. So as we just heard, it's unclear how this might play out, whether the companies will make

money. Do we have any sense of whether this could become a trend of oil deals between US companies in Venezuela? Sure. So it's hard to say, even if Maduro has been removed from office, the country is still

being run by his vice president, Delcy Rodriguez, under the title of acting president. And even if some companies are starting to make move, there's still a lot of political uncertainty. Industry analysts told me energy companies may try to prioritize short-term deals. They say once President Trump leaves office, it's hard to say what US foreign policy in Venezuela could look like and that could have a huge impact on international business

deals. And that leaves you just indicated the US is really playing a large role in this. But is the role of the US government here? Sure. So the Trump administration says that it's still working to bring some certainty through the Venezuelan

government. And US Secretary of State Marco Rubio told reporters a few weeks ago that Venezuela could begin discussing a democratic transition of power this month. Venezuela has a lot of oil resources, but industry leaders say long-term investments also come with a lot of risk.

And we'll have to see how that risk plays out. That is Natalie Weber from Houston Public Media. Thank you.

And that's up first for Thursday, August 20th.

I'm Sasha Feifer. And I'm Leyla Faldin. Today's episode of Up First was edited by Tina Crya, Raphael Nam, Alfredo Carbaol. I'm a daughter of DC and Taylor Haney. It was produced by Ziyad Bunch and Nia Dumas.

Our director is Katie Klein. We get engineering support from Carly Strange. And our technical director is A-O-N-Fane. And our deputy executive producer is Kelly Dickens. Show it as again tomorrow.

It's hard to refine your taste when everything in your algorithm is vying for your attention.

“Is that influenced or you follow giving you the right advice?”

What should we actually pay attention to in our social media feeds? This week on it's been a minute, culture, critic and host of the new podcast Feedback.

Watch the full, it's been a minute episode on YouTube or listen in the NPR app or wherever

you get your podcasts.

“History is intriguing, but unlike the present, it can feel far off.”

On NPR's through line, we bring it back to life and put you in the middle of it.

Go inside the stories from then, that shape the world we live in now.

Find NPR's through line wherever you get your podcasts.