Can America hold onto its superpower status as debt soars?
New York: Famous historian Sir Niall Ferguson calls it the “Ferguson Law – -“ a great power that spends more than defense risks, more than a great power ”.
In February, Ferguson announced in an article for the Hoover Institute at Stanford University, where he was a senior man.
And in existing assumptions, Congress Budget Office (CBO) projects will make almost twice the defense budget by 2050.
President Donald Trump won the Congress Transition of the “Big Beautiful Invoice ğı, which he would signed on the Independence Day, and spent two weeks of extra weeks of weeks.Credit: AP
“This unpleasant financial arithmetic, not only for the US economy, but also a danger to the position of the United States as the world’s dominant military force, Fer says Ferguson.
“It should be an urgent concern for American policy makers to recover a suitable relationship between debt service expenditures and national security expenditures.”
Enter Donald Trump and his great bill. The bill, a bag of policy priorities of Trump, set out to reach the presidential table this week with the Congress, the President of the President, the Day of Independence (Saturday Aest), the Republican Party, and indeed an extremely symbolic exhibition for the country.
Trump bombed Iran, dominated a NATO summit, a ceasefire shepherd between Israel and Iran, won an important and extremely conclusive victory in the US Supreme Court, “Crocodile Alcatraz” nicknamed and now opened a piece of signature.
The official title One Big Beautiful Invoice Law (OBBB) is at the center of Trump’s 2017 tax deductions for individuals and businesses, which will end at the end of this year.
According to non -Partizan CBO, these tax cuts contribute to the total increase in the budget deficit of $ 3.25 trillion ($ 4.95 trillion) in the next 10 years – $ 3.94 trillion dollars, including interest.
The Think Tank of the Liberter Cato Institute, which defends the limited government, said that the bill can actually add more than $ 6 trillion to the national debt under “realistic assumptions ında about economic growth, extension of taxes or expenditure reform delays.
Big, beautiful, Bonkers?
“The debt burdens in this law is unlocked and dangerous, Jud said Jud Block, a senior member of the New York -based Manhattan Institute, a conservative thinking tank. “One of the more expensive legislation in modern memory.”
The Trump administration and many Republicans see it differently. In their opinion, the invoice reduces debt because it contains savings measures often exceeding the current tax policy. Otherwise, the Americans would be hit with a tremendous tax increase. On the other hand, CBO is available. lawWhich taxes return to pre -2017 levels.
Block said Republicans could greatly justify Trump tax cuts 2017 because they are matched with significant simplifications of the tax code. This time it is not the case, but the OBBB said that there are positive aspects such as emergency tax transactions for research and development.
“To a large extent, most of the debt here comes from gifts such as overtime loans, deduction tax on tips,” he said. “They are not really justified as a tool for tax simplification or economic growth, which makes the increasing deficit more worrying.”
The Republican Assembly joins the speaker Mike Johnson to sign Trump’s bill.Credit: AP
Introducing tax outages for tips and overtime was a great Trump election promise in cities such as Las Vegas. Nevertheless, there is a great capture: the policy ends at the end of 2028, when Trump has left his post.
As Block pointed out, there are very important expenditure cuts in the design that Republicans do not always dare to reach in the past. The largest is a record of 1 trillion dollars for Medicaid, which provides health scope for low -income adults and families. The CBO estimates that this will lead to 11.8 million people living without health insurance until 2034.
The White House argues that there is no “cut” in Medicaid in OBBB. On the contrary, he says that savings are due to the removal of illegal foreigners from the program, to apply the needs of working needs, and to protect Medicaid for “really vulnerable”.
Medicaid was the focal point of a record -breaking speech that began on Thursday before the local time, the leader of the Democrats House of Representatives. Since the numbers in both congress rooms and stamped the authority of Trump to all aspects of American life, the Democratic Party hoped to send a signal to angry voters, even if the OBBB could delay the inevitable voters after Jeffries finally sat down.
“[Seventeen] Million people have lost health services, ”he said.[Eighteen] Million children only lost school meals. Three million Americans lost food aid. And $ 3.5 trillion was added to the opening. All for tax reduction for Trump’s billionaire donors. “
Newsom said, “Final betrayal.”
American debt interest payments are now exceeding the money spent for defense.Credit: AP
In New York, the young Risk Protection Fund Manager Spencer Judge was also harsh. After 150,000 criticizing Trump on tariffs, a 26 -year -old history, which follows an online history, said that history shows that debt accumulation is the ruins of empires.
“You cannot continue to add unlimited debt. Both sides are wrong about it, this is a complete mistake,” he said.
The judge, the administration claimed that tax cuts did not really contribute to the debt. The bill lifts the debt ceiling of 5 trillion dollars. “Why do they increase the debt limit if your debt does not add?”
The feeling in Wall Street is mixed, the judge says, but most people are agnostic. The markets are already at the highest level of all time, the US economy challenges expectations, unemployment remains low, and Trump’s tariff threats are largely revealed.
Maping with its assessment EconomistThe British Chief Editor Zanny Minton Beddoes, who says that the mood among New York financiers at the Aspen Ideas Festival is indifferent and indecisive about debt.
“Call me a European Grinch, but I felt I was coming to Pangloss Planet,” he said to the subscribers after the bill was going on the bill. “I’m worried that Trumponomics 2.0 is more fundamentally eroded than many people are willing to admit the foundations of the American economy.”
A merchant works on the floor of the New York Stock Exchange on Tuesday.Credit: AP
Ticing Clock Bomb
Steven Hamilton, an Australian economy professor at the University of George Washington, says the debate on how to measure the impact of a great beautiful bill on the debt. The issue is that it is crazy to allow the current policy to continue forever and, “it is crazy to allow the current policy to continue forever.”
“Within 10 years, the US debt to GDP will approach 130 percent in 10 years, which is always above the US history, far above the II.
“This is the debt we have and what we plan to do is to increase the debt by 25 percent in the next 10 years. A serious financial consolidation effort that we really need from the bill.”
Similarly, Block says that the design of the bill will not approve of such consolidation of the Congress and that the US will leave the “terrible” state in place.
Many analysts believe when a sovereign debt crisis is not when it is not. About a month ago, Jamie Dimon, General Manager of JPMorgan Chase, said that a crack in the bond market would be “would be.
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Hamilton believes that he will come earlier, not later. “At some point in the next 10 years, there will be an calculation that the music stops and the markets say, ‘Well, we will not finance it anymore, or he says. “You can’t continue along this way.”
The devaluation of the US debt will have terrible consequences that will clarify the 2008 global financial crisis for the global financial market and Australia.
Even if such a collapse does not occur on its own, the US debt burden, a future pandam, a kind of crisis caused by the emergence of war with war or artificial intelligence, leaves a precarious position to cope with a crisis.
“There are all kinds of things we don’t know, or he says. “We expose ourselves to a tremendous risk.”
Most of this risk depends on what is happening to interest rates in the coming years. The low rates between GFC and Covid-19 pandemi made us more affordable. That period is over.
Trump said it cost hundreds of billions of dollars a year in interest payments in the US government.
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However, the important thing is that long -term orbit and block, the results can be a disaster. “If these interest rates continue to rise, this can be the harshest threat to the American economy and the United States, or he says.
More than the threat created by Russia or China? “I don’t think it’s an exaggeration.”
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