When President Donald Trump invaded Iran earlier this year, the U.S. economy was already struggling with rising prices. Iran's subsequent closure of the Strait of Hormuz — the narrow waterway linking the Persian Gulf to the Gulf of Oman through which a large share of the world's oil is shipped — sent fuel and food costs spiking, accelerating inflation even further. Now a top economic adviser to former President Bill Clinton — whose administration balanced the budget, presided over four budget surpluses, and avoided any major wars — is issuing a warning about the conflict's true cost.

Dr. Robert J. Shapiro says the Iran War is going to hit Americans hard in the pocketbooks, because it is more expensive than Trump's Defense Department is willing to admit. With Trump running a $40 trillion deficit — by far the largest in American history — that enormous expense will be like gasoline on the fire of Americans' hardships, he argues.

The warning could hardly come at a worse time for the president. Trump's Republicans just suffered a historic setback in the 2026 midterm elections, and even party members admit it was due to the unpopular Iran War and its consequences.

"This is one of the biggest waves in American history," Kyle Kondik, polling expert and managing editor at Sabato's Crystal Ball — the election-analysis newsletter published by the University of Virginia's Center for Politics — told AlterNet. "The Watergate wave of [the 1974 midterms] might be the only comparable election in modern history. This was kind of like [the 2006 midterms], but clearly bigger."

It was a wave so large that Trump — who, according to AlterNet's reporting, spent months trying to steal the midterm elections through litigation, voter intimidation, illegal demands to scrub voters from the rolls, and the spread of misinformation — simply could not deny the results, unlike his continued refusal to accept his defeat in the 2020 presidential election.

"He ultimately couldn't jam up the 2020 results either," Kondik told AlterNet, referencing how, after losing in 2020, Trump became the only president to ever attempt a coup after losing an election. "This was such a thumping that even he couldn't deny it with a straight face."

The economist behind the warning is Dr. Robert J. Shapiro, who was a top adviser during Clinton's 1992 presidential campaign — the first of two victories won largely on economic policy — and then became one of the few architects of Clinton's booming economy while serving as Under Secretary of Commerce for Economic Affairs, the Commerce Department post overseeing the nation's official economic statistics. Unlike Trump's two terms, which have been marred by high prices and low job growth, Clinton presided over peace, low prices, and the most job creation of any president before or since: nearly 23 million jobs in total.

In the following interview, Shapiro spoke with AlterNet about Trump's war in Iran, how it is impacting Americans' financial bottom line, and what it all means for America's political future. The interview has been lightly edited for clarity, context, and length.

Interview: Robert J. Shapiro on the Debt, the Midterms, and the Cost of the Iran War

Rozsa: I want to talk about the midterms, in the context of previous conversations and some of the themes I raised with Al From, founder of the Democratic Leadership Council, the centrist group that powered Bill Clinton's 1992 presidential campaign. First, I want to talk about the $40 trillion debt. I am not under the illusion that Trump lost directly because of the debt, but there is a case to be made that the debt is exacerbating many of the economic conditions that are causing Americans to struggle, such as high prices and low job growth. Would you agree with that analysis?

Shapiro: Yes. I think the debt does have effects that have exacerbated the economic squeeze on people. Most clearly, financing the debt absorbs so much available savings that other forms of credit, like mortgages and credit card debt, become more expensive. It's supply and demand. There's less savings left over, because when you have a $40 trillion debt, it's not simply that you have to finance an additional $2 trillion each year, because that's the annual deficit now: $2 trillion. In addition, $10 trillion each year comes up for refinancing. That is, the Treasury securities mature, and so you have to float new Treasury securities to refinance the debt that has now matured. You buy a 10-year bond, or you buy a five-year note. Five years later, it matures. You've got to pay it off, and in order to pay it off, you've got to borrow the money.

So it starts out with $2 trillion in additional deficit. Then you have $10 trillion which has to be refinanced. And if this was debt that was floated five years ago or 10 years ago or 15 years ago, the interest rate is higher now. And so the third way in which it affects people is that we're now paying more in debt service on $40 trillion. I don't have the figure in my head. That debt service is a budget item. We have to pay it, and it comes out of, for example, healthcare spending. One of the reasons that the Congress and the administration cut ACA [Affordable Care Act] subsidies was to pay for other things: to pay for tax cuts, which produced the $2 trillion annual deficit, and also to pay for the debt service.

That squeezes programs which support the lifestyles of Americans, and consequently increases the stresses on them. That's certainly true for Medicaid as well. It's true for SNAP [the Supplemental Nutrition Assistance Program, formerly known as food stamps]. And it makes it much harder to put in place additional programs that could relieve economic stress, like expanded support for childcare.

Rozsa: Or creating jobs — engaging in New Deal-like programs, Franklin D. Roosevelt's 1930s public works and relief programs, that actively create jobs.

Shapiro: Yes, for a couple of reasons. One is that as interest rates rise, the economy on the margin slows, because people have to pay more to borrow the money to buy a car or to buy a house, and businesses need to pay more to invest and expand their facilities. So it slows the economy, and when it slows the economy, you have less investment that will create jobs, either in new businesses or in existing businesses.

Rozsa: Now I want to talk about the political consequences of —

Shapiro: Let me give you one anecdote. When I was advising Governor Clinton on a budget, I was making an economic argument, and he said to me, "It's not just economics, it's also politics, because only by reducing the deficit can we create the political space for federal programs to help people." Unless we do that, the argument is immediately that the deficit is too high and you're increasing the deficit.

Rozsa: You said Governor Clinton. Why not President Clinton?

Shapiro: Well, this was when he was running for president in 1992.

Rozsa: I'm glad you brought that anecdote up, because it intersects with the political question I was about to ask. I argue that the deficit — by raising prices, depressing job growth, and reducing money available for economic relief programs — is a factor in why Trump lost on Tuesday. From there, I want to talk about President Clinton, who won major elections, including his 1996 re-election, despite suffering his own catastrophic midterm loss in 1994, when Republicans won control of both the House and Senate for the first time in 40 years, because he understood how to balance economic frugality with providing relief for those who need it. I want to quote your Washington Monthly article from August. You said, "Clinton convinced Democrats in Congress to double down with larger tax increases for wealthy people, raised the corporate tax rate, increased Medicare taxes for wealthy people, and hiked the federal gasoline tax. It worked. Those changes, along with strong economic growth, increased federal revenues 54 percent after inflation over his two terms. Clinton also convinced Democrats to cut defense spending by 12 percent on a sustained basis, another first." Do you think Democrats could use the same approach right now to simultaneously balance the budget and provide relief to people, and thus win elections like the one Trump just lost?

Shapiro: Absolutely. And I think the markets would welcome it. Not only that, every part of it is popular. The public supports every part of it. Democrats and Republicans support higher taxes on wealthy people and higher taxes on highly profitable corporations, in enormous numbers, like 75 percent. They all support reductions in defense spending. And that was even apart from the spending associated with the mindless war with Iran. One of the things we're going to learn from the Democratic Congress is how much that has actually cost. They've admitted to $50 billion.

I would be surprised if it wasn't two to three times that. That will further increase public support for precisely this type of program: address the deficit and create room for federal initiatives to help people by raising revenues from high-income people, raising revenues from profitable corporations, and turning off the endless spigot for the Defense Department.