U.S. national debt now exceeds $37 trillion and risks rising substantially. Recent tax and spending legislation is expected by many market participants to widen the deficit toward unsustainable levels. Political incentives favor stimulus and tax breaks that allocate funds disproportionately to higher earners, increasing inflation expectations as wealthier recipients spend more. Multiple debt-reduction proposals exist. The Simpson-Bowles Plan, created in 2010, targeted up to $4 trillion in deficit reductions over a decade but failed to secure congressional support. The plan combined spending caps on discretionary programs with revenue measures, seeking a balanced mix of cuts and increases.
The U.S. national debt has now surpassed what is truly a staggering number - $37 trillion - and on its way much, much higher. Many market participants and experts believe that Trump's recently-passed tax and spending bill will blow the deficit to an unsustainable level. On that, we'll have to see, but no one can argue that our national debt isn't a problem and shouldn't be a priority.
It should be, and it seems like there's a fair amount of rhetoric to support that notion. But the reality is that money buys votes, and whether you're giving money away via tax breaks (much of which will flow through to the upper echelons of earners) or give stimulus checks to all, government stimulus is still stimulus. Those with more money to spend will likely do so, leading to higher inflation expectations moving forward.
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