Goldman Sachs says that Trump’s spending plan will not prevent the national debt from reaching “non -sustainable” levels that have not been seen since World War II.

Bill in spending law Pass By Republicans in the House of Representatives, along with an increase Customs tariff revenuesIt will slightly reduce the budget deficit when excluding interest payments, and Manuel Abakas admitted from Goldman, David Merikli, and Alec Phillips on Tuesday. Besides the height Borrowing costsThey said that the draft law leaves the overall deficit path without a fundamental change.

“But this path is still not sustainable: the basic deficit is much greater than the usual in the strong economy, the debt ratio to GDP is close to the height of (WWII), and the highest real interest rates have put debts and interest expenses as a share of gross domestic product on more severe paths than the last round,” wrote the Goldman team.

As the above charts appear, the size of the debt is highly dependent on how interest rates move over the next marital contracts. Now, and 36 trillion dollars National debt represents approximately 120 % of GDP, and the Ministry of Treasury finds itself borrowing more just to meet the increasing cost of its service.

The United States pays more attention to its religion than it spends on medical and defense. These interest payments will reach a trillion dollars next year, and they are only social security as the largest government expense, According to To the responsible federal budget committee, the thought reservoir.

“If the debts are large enough, the interest expenses may become so large that the installation of debts to the gross domestic product will require the operation of continuous financial surpluses with a volume that is rarely sustainable historically because it is economically expensive and economically difficult,” the Goldman team wrote.

Trump and Biden’s first departments responded to the Covid-19 pandemic with a war-like budget. But Spigot has not been turned off, even when the American economy returned to full work.

Non -party Congress budget office Estimates The issuance of the spending bill for the Republican Party approved by the house will increase the deficit by $ 2.8 trillion during the next decade. The White House and some Republican lawmakers Argue This projection should not include the cost of expanding Trump’s tax cuts for 2017, which is scheduled to end this year without the bill.

But the essence 36 trillion dollars problem Does anyone know at any level that the debt becomes unnecessary, said Gennadi Goldberg, head of the US price strategy at TD Securities, said, said. luck.

Treasury Secretary Scott Bessin He said The United States government suffers from a “spending problem”, but it is not a “revenue problem.” Goldberg agrees with the previous argument, but said that the United States also does not impose significant taxes on both the country’s gross domestic product and government waste.

Goldberg said last month: “Therefore, it must rise either taxes, spending must decrease, or a mixture of the two,” Goldberg said last month. “It seems simple, but it is very politically, very complicated to find out.”

High interest rates would increase deficit pressure

Continuing to avoid taking action puts legislators in the future in a more strict place, especially if borrowing costs rise.

Revenue on long -term US Treasury bonds Stay While investors are waiting for the patient’s federal reserve to reduce interest rates, and Fears Around the prosperous deficit and potential inflation regeneration may continue to pressure upward on rates.

Fixed income experts are also Closely Any changes to foreign demand for American debt. If the increasing commercial and geopolitical tensions are undermining the state of the dollar as the world Reserve currencyThe United States government will find itself borrowing at higher rates than it is used to.

This means that Congress may eventually have to make difficult choices when it comes to spending and taxes. The Goldman team said that if legislators have been waiting for a long time, there may be a historical austerity to avoid a disaster.

“In this scenario, one may worry either that a large financial unification and a continuous financial surplus may be a self-defeat-if the gross domestic product decreases enough, the debt rate to the gross domestic product may not shrink,” they wrote.

Of course, politicians will also face the temptation to print more money to pay government bills. The Republic of Germany Weimar tried this tactic in the aftermath of World War I. DestroyerIt nourishes the economic distress and the social turmoil that led to the rise of the Nazi party.

This warning of history, however, is not always taken care of by governments.