#OneBigBeautifulBill

How will the bill affect the US debt profile?

🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷🪷

The legislation would raise the debt ceiling by $5 trillion, from $36.2 trillion currently (which amounts to 122 percent of gross domestic product or GDP), going beyond the $4 trillion outlined in the version passed by the House in May.

Washington cannot borrow more than its stated debt ceiling. But since 1960, Congress has raised, suspended or changed the terms of the debt ceiling 78 times, facilitating more leverage and undermining the US’s long-term fiscal stability.

In his first term, Trump oversaw a roughly $8 trillion increase in the federal debt, which surged due to 2017 tax cuts and emergency spending, ap-proved by Congress, during the COVID-19 pandemic.

Debt as a share of GDP was already higher last year than it was anytime outside of World War II, the aftermath of the 2008 financial crisis or the COVID-19 pandemic. Deficit concerns contributed to Moody’s downgrading of the US credit score in May.

For its part, the White House claims the new tax bill will reduce projected deficits by more than $1.4 trillion over the next decade, in part by spurring additional growth. But economists on both sides of the aisle have strongly disputed that.

Indeed, according to the non-partisan Committee for a Responsible Federal Budget, interest payments on national debt will rise to $2 trillion per year by 2034 owing to the legislation, crowding out spending on other goods and services.