President Donald Trump’s 2017 tax cuts, primarily for corporations and the wealthy, will again force the U.S. Treasury Department to borrow $1 trillion in order to cover the federal government’s increased spending in light of falling revenues — for the second straight year.
Bloomberg News reported the development late last month.
Treasury borrowing surpassed $1 trillion during President Obama's first term as government spending soared amid the stimulus to combat the 2008 financial crisis, but it has steadily declined in the years since, settling down to $519 billion in 2017 before nearly doubling last year.
Bloomberg reported that the “fiscal 2018 U.S. budget gap hit a six-year high of about $780 billion, and the Congressional Budget Office forecasts it will reach $973 billion in 2019 and top $1 trillion the next year.”Though some financial experts are insisting that the U.S. economy remains strong — and stronger than many other advanced economies — others are not so confident and view these developments as red flags.
DoubleLine Capital LP’s Jeffrey Gundlach has warned that the U.S. economy will be plagued by an ocean of debt. He cited the fiscal 2018 rise in America’s national debt among risks in his annual webcast. Billionaire investor Seth A. Klarman, in a letter presented at the World Economic Forum in Davos, Switzerland, said global social tension, receding American leadership and rising debt levels all present a red flag.