Senate Republicans are supporting a budget package that will increase Debt roof by $ 5 trillion, Biggest growth In American history, questioning its economic impact.
The proposal is part of President Donald Trump’s “One Big Beautiful Bill Act” and will give more space to spend the government.
It seems that they will need it: Bill Continues and expands tax breaks Set to end after 2025And similar provisions in the house version of the bill were estimated to have a deficiency of $ 3.8 trillion in the next decade, According to Congress budget office,
Federal borrowing in the form of bill is spending fast and losses Continue to growThe government has run the annual shortage since 2001Constantly adding to national debt.
What can it mean for the economy here – and your wallets.
The loan is 50% since 2020 – and still climbing
The Congress regularly increases the debt limit to keep the government funded, and another time limit is coming fast.
Without action, according to the estimates of the US, August may run out of the lending room soon as August Treasury department And Independent analystIt coincides with a wide time frame to fund the government and avoid shutdowns.
Extending the roof through a reconciliation bill will allow the government to make fixed payments – including social security checks, benefits of veterans and tax refunds – and help avoid the upheaval of the financial market that can negatively affect the wider economy.
At the same time, authorizing $ 5 trillion into the new lending can add to a loan load that has already increased quickly. National loan has increased from $ 23 trillion in early 2020 Today more than $ 36 trillionInspired by epidemic relief, high interest costs and lack of increasing budget.
Wall street is pushing back
Jamie Dimon, CEO of JP Morgan Chase, recently warned that rising deficit could eventually stand investors. “One day … there is going to be a difficult time in bond markets,” he said Fox trade interview On 16 June. “I don’t know that it is six months or six years old.”
Worry, Echoed by billionaire investor Rayo, This is that as the government takes more loans, investors may be uncomfortable about their long -term fiscal approaches. To offset that risk, they can do Demand high returns To buy American Treasury Bond. This will push the treasury yield, which affects interest rates on hostage, credit cards, auto loans and more.
The 10-year-old Treasury is almost unchanged since a major benchmark-a major benchmark for the yield-manager and loan rates, even after several fed rate cuts aimed at reducing the cost of borrowing. Jeffer’s chief American economist Thomas Simmons says that the markets are not yet a major warning signs.
“We do not see evidence of digestive problems when the Treasury is releasing new bonds,” the semens tells CNBC.
What does it mean for your wallet
For now, consumers may not see major changes in the cost of borrowing everyday.
“I don’t think this is an issue that is going to push the rates from here too much, not in any short -term time horizon,” Simmons.
However, when increasing the debt roof may no longer result in high lending costs, “long -term, debt trajectory matters,” Christopher Hugs, ” A certified financial planner in New York City,
“Ignoring the long-term cost of chronic overseasing is like ignoring the war on a bridge. It doesn’t matter today, but someday-it will happen.”
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