The International Monetary Fund (IMF) raises a red flag: Donald Trump's tax bill, already nearing the finish line, could deal a powerful blow to the fiscal stability of the United States. Simply put — this initiative could completely destroy all planned efforts to reduce the deficit and stabilize the national debt.
At a briefing in Washington, IMF official spokesperson Julia Kozak stated that the proposed tax overhaul contradicts the declared trajectory of fiscal consolidation and seriously undermines institutional efforts to keep macroeconomic indicators in the green zone.
"If consolidation had started earlier, a smoother and more manageable trajectory to budget sustainability could have been established," Kozak emphasized.
IMF scans Trump's bill: what will it lead to
The fund, which plays the role of a global fiscal arbiter, regularly reminds: it's time for the U.S. to start reducing the volume of loans and to balance the budget more actively. The key benchmark for this is the debt-to-GDP ratio — a kind of systemic barometer of stability.
In the current context, the IMF views the medium-term outlook as a five-year horizon. Meanwhile, lawmakers in Congress are not slowing down: the House of Representatives has already voted for the Senate version of the bill, which, according to CBO (Congressional Budget Office) estimates, could add another $3.3 trillion to the deficit.
Kozak added that the IMF is carefully analyzing the possible consequences of tax reform and is preparing an updated macroeconomic forecast for the U.S. and the global economy as part of the upcoming release of the World Economic Outlook.
Republicans roll out a strategy to cement the tax breaks of 2017
Against this backdrop, Republicans are pushing forward an initiative to enshrine Trump's key achievement — the tax reform of 2017 — on a permanent basis. According to CBO estimates, this super bill will lead to a drop in budget revenues of $4.5 trillion while simultaneously cutting expenses by $1.2 trillion by 2034.
The Senate version, created at the request of the GOP (Republican Party), provides for optimization of $507.6 billion relative to the political baseline. In reality, this is an attempt by Republicans to cement tax benefits in concrete and sell it all as a zero budget burden.
However, Democrats and some economists are confident: this is accounting magic. The GOP is using a new trick — not comparing the bill to current law, but to current policy, as if it would continue forever. This methodology is pure fiscal head fake, aimed at circumventing reconciliation rules (the procedure for passing the budget with a simple majority).
"They can draw pretty numbers in tables as much as they like," said Senate Democratic leader Chuck Schumer. "But in reality, you can't just mask a debt hole in the tens of trillions."
The price tag is rising, and the bill is becoming politically thorny
The current version from the Senate is already more expensive than expected — CBO estimated it at $2.8 trillion, and this is without accounting for secondary effects: rising rates, increased costs of debt servicing, inflationary spikes.
The bill covers a whole range of key policies from Trump's agenda: from extending tax bonuses to radical cuts in social spending — referring to Medicaid and SNAP (food stamps). These cuts have sparked a wave of criticism from welfare program advocates and centralized redistribution.
All of this turns the document into a nuclear button of American fiscal policy. On one side — an ambitious tax deregulatory agenda, on the other — a huge risk for the macroeconomic development of the country.
Meanwhile, Senate fiscal hawks are demanding a revision of certain provisions: a number of proposed spending cuts have been deemed inconsistent with budgetary rules and have already been removed from the text.
