- Non -party Congress budget office It is estimated that the effect will be if the tax cuts and jobs law is taken permanently. It found that the American debt preserved can increase more than 200 % of GDP by 2047 and 250 % by 2054, assuming that the highest debt burden also puts more upward pressure on borrowing costs.
Make the tax cuts of President Donald Trump permanently sends debts that the public keeps above 200 % of GDP within a few decades, according to a new estimate from the non -party budget budget office.
Trump’s economic policy is scheduled to end from his first term at the end of this year, but he and the senior Republicans of the Senate called for it to make it permanent.
However, some financial conservatives pushed back, prompting the Republican legislator to demand the Central Bank of Oman to estimate what he would do for national debts.
In response, The Central Bank of Oman said on Friday If the tax cuts and jobs law is permanently extended and there are no other changes to fiscal policy, then the debts that the public maintains will reach 214 % of GDP in 2054.
Assuming that borrowing costs face more upward pressure amid the deterioration of the financial situation, which reaches an additional percentage, the debts will reach 204 % of GDP in 2047 and exceed 250 % in 2054.
Total US debt It is 36 trillion dollars, and the audience’s debts are about $ 29 trillion. The cost of American debt service It already tops $ 1 trillion per year, Even more than the Pentagon budget, add more to debt.
“The effects of the total economic reactions will increase interest rates, and therefore, lead to worse financial results,” Peter J. Peterson. “These results show the sensitivity of the nation’s financial resources to borrow costs.”
Under the estimate of the current CBO foundation line, which is supposed to end the validity of the tax cuts – an unlikely scenario – the debt will end to 166 % by 2054 of 99 % today. Even these expectations would break the records, as they lead the highest previous level during the aftermath of World War II, while the debts will continue to rise.
A White House official said luck Reforms on the Trump administration supply aspect, such as more energy production, abolition of genital restrictions, and spending will stimulate growth and expand the tax base. This would also reduce inflation, allowing the Federal Reserve to reduce interest rates and reduce borrowing costs.
The official added that the administration plans to increase revenues from the customs tariff, noting that the Chinese Trump duties from the first period collected hundreds of billions of dollars without a significant impact on inflation or growth.
The report of the Central Bank of Oman did not measure the expected debt sustainability. But if it exceeds 200 % of GDP, it violates the level of the maximum set Penn Wharton Budget Model.
In a report in October 2023, entitled “When will federal debts reach unsustainable levels?” She said that the American debt keeps the public cannot exceed 200 % of GDP, even under the favorable market conditions at that time.
While Japan has a larger debt burden, it is not an example because the higher local savings rate allows the country to accommodate more government debts.
The report said: “This value of 200 percent is calculated as an external crisis using different favorable assumptions: a more logical value is closer to 175 percent, and until then, it is assumed that financial markets believe that the government will ultimately implement an effective closure base.” “Once the financial markets believe otherwise, financial markets can collapse with the bions of the smaller gross domestic product.”
The estimate of the Central Bank of Oman comes as debt warnings were accumulating. Recently, the billionaire investor Ray Dalio expected the United States to go to Inchid debt crisis.
Ultimately, the debt offer that the United States must sell will be greater than demand in global financial markets, which leads to “” “Shocking developments“Beware in Converge directly A conference in Singapore earlier this month.
“There may be a restructuring of debt,” Dalio said. “There may be pressure on countries to buy debts, to have debts, political pressure on countries,” Dalio said. “There may be reduced payments for some predators for political reasons, there may be debt criticism.”
This story was originally shown on Fortune.com
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