The Trump bill is great, but it is not beautiful

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Your guide to what the second period of Trump means to Washington, business and the world

After a lot of discussion, Republicans in the United States have reached an agreement on the legislative plan belonging to Donald Trump to reduce taxes. On Tuesday, the US President urged his party to agree to “his beautiful big bill” for a rare visit to the American Capitol. You are now waiting for the approval of the House of Representatives. If it is passed, it will go to the Senate. Long legislators should think twice. Trump gets a partially mark on the bill. It is, in fact, enormous. US debt can raise more than 3.3 trillion over the next decade. However, in its current form, the economic consequences risk being many cellars of what the president depicts.

Fears about the growing debt pile of America precedes the second period of Trump. But his wrong management approach to policies has sparked further alert. Last week, Moodyz shrinked The United States of its tripartite credit rating of the three -class, to become the last of the three major credit rating agencies to do so. This prompted the long -term borrowing costs. In recent months, the White House stopping agenda has also raised questions about the state of safe haven for American assets, which have been subjected to ascending pressure on the treasury returns.

Trump’s financial plans add an insult to the injury. The draft law will push the debt ratio to the GDP of the United States to an increase of about 25 degrees Celsius to a record of 125 percent by the end of 2034, according to expectations from The responsible federal budget committee. The annual deficit is expected to rise as a share of the economy to 6.9 percent, from about 6.4 percent. This raises the risk of high clarity and disturbance in US borrowing costs, while increasing fears of US debt sustainability.

The package presents some pledges in the president’s main campaign. It extends the tax cuts that were approved in its first term, while reducing taxes on advice and paying additional work. Spending It is set aside for defense and security limits. Elsewhere, the bill is more generous, which enhances the child tax credit and standard income tax deduction. There are also stronger than the expected investment incentives for manufacturing facilities. The Republican Party has set the conditions of the sunset on some vaccine, to make it look more acceptable. But many tax It will be difficult to reverse the discounts.

Any batch of families and companies will be curbed by the Slapdash invoice efforts to compensate for expenses. For example, there are significant discounts in Medicaid benefits, which may leave millions of weak Americans without health insurance coverage. The bill gives the largest stumbling block to the highest wines of the leaves, while 40 percent is less than 2026, according to what he said. Penn Wharton Budget Model. The reduction of green tax credits under the Act of Inflation also reduces the total gains of companies.

In general, the draft law is expected to raise the gross domestic product by only 0.5 percent over the next decade. The White House argues that the predictors ignore the effects of the broader policy agenda. This is perhaps fair. Although tariff rates are unconfirmed, customs revenues can help finance additional spending. However, the strike of economic growth from Trump’s duties will compensate for more than compensation for support from his financial package, according to Goldman Sachs. A higher growth rate is necessary to get the debt path in America to a more sustainable foot.

The passage of the bill is not guaranteed. Republicans only have a narrow majority in the House of Representatives and the Senate, and Trump’s agenda has created a split between the financial hawks and those concerned with the impact of discounts on poor voters. It may develop. But in the end, the bond market will have the final statement. Without dangerous attempts to restrain us, investors’ reaction will not be beautiful.