The White House under President Donald Trump is urgently pushing through a major tax bill this week, while the U.S. current account deficit has soared to $450.2 billion in the first quarter of 2025 – the highest level since late 2006.
In that context, Trump is urging the Senate to quickly finalize the proposal to make his first-term tax cuts permanent, aiming to eliminate the massive deficit. The bill is now the administration's key solution to respond to mounting fiscal pressure as Republican lawmakers race against a July 4 deadline.
According to the White House Economic Advisory Council on Wednesday, Trump’s bill – supported by revenue from expanded tariffs and faster growth – will reduce the debt level and reverse the trend of soaring national deficits. However, this view is not universally held.
Many independent analysts and some Republican senators warn that the bill could worsen the current massive debt burden, even undermining the United States' credibility in the global credit market.
The Senate faces strong backlash over concerns about public debt
Stephen Miran, Chairman of the Economic Advisory Council and direct advisor to Trump on economic policy, asserted that the bill is “extremely strong,” predicting it will “trigger an economic boom” and “lower the deficit and public debt.” However, many remain skeptical.
Ron Johnson, a Republican senator from Wisconsin, expressed serious concerns last week. He said: “We are worried about a severe debt crisis. What we want to avoid is global creditors viewing the United States as a credit risk.”
Currently, Republicans control the Senate with a slim majority of 53-47, and some senators are still hesitant. Trump, growing impatient with the pace, posted on Truth Social on Tuesday:
“My friends in the Senate, lock yourselves in a room if necessary, don't go home, and COMPLETE THE DEAL THIS WEEK. NO ONE GETS A BREAK UNTIL IT'S DONE.”
The House passed their version last month, but some Republicans are calling for deeper amendments to cut government spending or tighten financial regulations in the future before committing.
Trump's team and economic forecasting organizations clash over financial scenarios
The core of the debate is the long-term impact of Trump's policies. The Congressional Budget Office (CBO) recently estimated that the House version would increase U.S. public debt by an additional $2.4 trillion by 2034. Including interest rate increases, this figure rises to $2.8 trillion.
Although Trump’s advisors insist that the bill stimulates growth and investment, the CBO along with many other organizations like Wharton School and the Federal Budget Committee predict that the deficit will expand for years to come.
Miran dismisses CBO's estimates as inadequate. He said: “They do not reflect the overall deficit trend as they do not account for other factors,” referring to additional economic benefits from deregulation and energy policy.
The Economic Advisory Council's forecast scheme includes deficit savings of $2.3 trillion from tax growth, $3.7 trillion from deregulation and energy, $1.8 trillion from discretionary spending cuts, and $3.2 trillion from new tariffs. In total, the administration claims that Trump’s comprehensive economic plan will lower the debt ratio to 94% of GDP by 2034, however skeptics argue that this figure is based on rather optimistic calculations.
Meanwhile, actual data is revealing a dismal trend. The U.S. current account deficit, which tracks the value of goods, services, and investment in/out of the country, has increased by $138.2 billion in the first three months of the year.
This represents a 44.3% increase from the previous quarter, bringing the annualized deficit to $1.8 trillion – a level not seen since before the 2008 crisis. The deficit ratio to GDP reached 6.0%, close to the record of 6.3% in the third quarter of 2006.
The reasons pushing the deficit up sharply stem from U.S. businesses massively importing foreign goods before new tariffs are applied, in order to avoid higher costs. This wave of imports caused the U.S. trade balance to hit a record high, while the government attempts to convince financial conservatives that they have the situation under control.
Thus, although Trump’s tax bill is presented as a solution to shrink the debt, it still occurs against the backdrop of severe trade and investment deficits not seen in decades.
Steve Scalise, Republican House Majority Whip, dismissed CBO's warnings, stating: “They are always wrong and always overlook the impact of tax cuts on U.S. economic growth.” Nevertheless, pressure still exists within the Republican ranks.
Lacking a substantial majority, Trump needs all his party’s senators to be united. Just a few dissenters could doom the bill along with the opportunity to win financial policy before the holiday break.
The U.S. government bond market, which has risen from $5 trillion in 2008 to $29 trillion today, underscores the importance of this timeline. With debt at a record high, the path ahead will confirm or refute Trump's commitment to rectify the national finances through tax cuts, deregulation, tariffs, and robust economic stimulus measures. Whatever the outcome, the deadline is approaching and the numbers wait for no one.
Source: https://tintucbitcoin.com/nha-trang-khen-du-luat-giam-no/
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