Recently, the US Congressional Budget Office (CBO) warned that if the Tax Cuts and Jobs Act is extended permanently, the country's public debt could exceed 200% of Gross Domestic Product (GDP) by 2047.
 |
| Currently, the total US public debt is 36,000 billion USD. Illustrative photo. (Source: Getty Images) |
President Donald Trump's first-term tax cuts are set to expire at the end of this year, but Trump and Republican senators are calling for them to be permanently extended.
However, some lawmakers have expressed concerns about the idea.
According to CBO, if the President's administration extends the law without any adjustments to fiscal policy, the public debt of the world's largest economy will reach 214% of GDP by 2054.
In particular, if borrowing costs increase by 1 percentage point as fiscal conditions worsen, public debt could reach 204% of GDP in 2047 and exceed 250% of GDP in 2054.
Currently, the total US public debt is 36,000 billion USD. The annual interest payment has exceeded 1,000 billion USD, higher than the defense budget.
The Peter G. Peterson Foundation warned that interest rates could continue to rise, worsening the financial situation of the world's No. 1 economy.
Even if the tax cuts expire — which is unlikely — the country's public debt will still rise from 99% of GDP today to 166% of GDP in 2054, according to the CBO's forecast.
The Trump administration believes that economic stimulus measures such as expanding energy production, loosening regulations and cutting spending will boost growth, help expand the tax base, reduce inflation, and create conditions for the US Federal Reserve (Fed) to cut interest rates, thereby lowering borrowing costs.
In addition, the White House expects to increase revenue from tariffs, emphasizing that tariffs imposed on China during Mr. Trump's first term brought in hundreds of billions of dollars without much impact on inflation or economic growth.
According to Penn Wharton's budget model, the public debt of the world's largest economy cannot exceed 200% of GDP even under favorable market conditions.
However, if the market loses confidence in the government's ability to control debt, a financial crisis can occur even if the debt-to-GDP ratio has not reached this threshold.
Source: https://baoquocte.vn/no-cong-my-se-vuot-200-gdp-neu-ong-trump-gia-han-vinh-vien-chinh-sach-cat-giam-thue-308676.html
Comment (0)