May 21, 2025 ☼ Zettelkasten ☼ Automated Post
Screenshot of Commentary: Trump caught the debt crisis
The US national debt has been growing since the 1980s and the bill is finally coming due. With the national debt currently sitting at $36 trillion, financial experts warn that the US is borrowing too much money. Critics blame political dysfunction and lack of agreement on measures to address the large annual fiscal deficits. Despite warnings of high unemployment, the US economy has remained robust. However, the downgrade of the US credit rating by Moody’s from “stable” to “negative” is a clear indication of the looming debt crisis. This has already led to higher US rates, which could worsen the fiscal problem if not addressed.
The tax-cut bill that is being prepared by the Congress Republicans is expected to add trillions more to the national debt. There are concerns that the administration is ignoring the problem as there hasn’t been any credible plan yet to stabilize the debt. Budget experts suggest that it would be manageable if the federal debt could be stabilized at around 100% of GDP, then slowly reduced over time. However, the current administration is seen as contributing to deeper economic problems with Trump’s protectionist tariff regime that is expected to reduce federal tax revenue and make annual deficits bigger. Trump’s claim that the tariffs will generate new tax revenue is being disputed by many economists.
#USNationalDebt #Moody’sDowngrade #FiscalDeficit #Trump’sTariffRegime #DebtCrisis