- The increasing national debt in America, now more than 36.2 trillion dollarsIt has raised increasing concern between economists and credit agencies such as Moody’s, which recently reduced the classification of American credit amid fears that economic growth will not keep pace with the height of debt and interest payments.
Economists have criticized politicians ’plans to reduce the national debts of America as very small, very late. But analysts warn that the issue will now return home to roam, with confidence that has not been purchased in the United States’s financial future began to wear.
American debts, which currently It reaches more than 36.2 trillion dollars, and increases increasingly on the Economists’ business schedules. Their fear is that with the increase in debt burden in the country, along with interest payments to serve debt, the economy will not grow quickly enough to maintain spending.
Such fears were reflected in a Lower MOODY We are credited last week from AAA to AA1. “While we realize important economic and financial strengths in the United States, we believe that this is no longer a fully balanced balance in financial standards.”
This classification is another fork on the US financial health aspect, despite the protests from Treasury Secretary Scott Pisent that the market should not respond to me a little Modi news.
Jim Reed from Deutsche Bank said in a note seen by luck This morning: “I felt yesterday that we were somewhere along the” death of thousands of discounts “regarding the American financial situation. It is difficult to know where we are on the thousand, but it may be many thousand of zero even with yesterday witnessed an initial sale with the continuation of the session.
“At the end of the day, the loss of the last classification in the tripartite United States-late on Friday night does not change anything immediately, but it keeps drip, driving from the poor financial news that accumulates against bridging debt in the background.”
President Trump and the Council of Ministers are not blind to the issue of national debt. Trump has suggested that it can be paid with the money from his “Gold Card” visa scheme, while the dominant message from DOGE (Government Ministry of efficiency) was efficiency and cost reduction.
But Trump maintains an accurate balance in the products that his campaign promised: reduce costs and reduce taxes, which in turn reduces the revenues needed to restore government spending.
The Council of Ministers currently encourages Congress to pass the “major and beautiful bill” from tax cuts. Some of this expansion of the 2017 tax cuts includes, which are scheduled to be expired at the end of 2025, with remarkable additions such as taxes on tips and payment of additional work.
The Trump administration argues that the draft law will actually help restore the debt ratio to GDP. The departments have two options to provide assets in the system: reducing debt or increasing gross domestic product.
They say that the expansion of tax cuts will do the latter, They argue their bill The real GDP in the short term will be raised by 3.3 to 3.8 % and the real long -term GDP in 2.6 to 3.2 %.
Congress Budget Office (CBO) does not correspond. in and April reportNon -party analysts organization stated that if the provisions of the tax law are extended for the year 2017, and thus reduce tax revenues, and without other changes to fiscal policy, and public debt 220 % of GDP will reach 2025.
This will be the highest 63 points of long -term basic expectations without discounts.
Banking services on the Federal Reserve Bank
In the event that the American debt buyers lose confidence in the country’s ability to pay, America has a card that it can play in the form of the Federal Reserve.
The Central Bank can use a quantitative relief, which is likely to raise eyebrows, to reduce long -term interest rates and facilitate the continuation of borrowing.
While the bond market reaction was somewhat minimal as Moody reduces, UBS adds that the fluctuation must increase at some point, the Federal Reserve is likely to operate.
In a note sent to luck Today, Mark Heifelli, UBS chief investment official: “In general, we see this last credit measure as major risks instead of a basic transformation of the markets. We also expect the Federal Reserve to intervene if there is an unsustainable or unnecessary increase in bond yields.
“So, although the classification may tend to some of the last” good news “momentum, we do not expect it to have a great direct impact on the financial markets.”
This story was originally shown on Fortune.com
