With Trump’s victory, the possibility of addressing the issue of government spending and public debt has been raised.
One of the great threats to the EEII economy and consequently to the world economy is a potential public debt crisis.
The figures speak for themselves: in 1982 the US public debt was around 35% of the Gross Domestic Product (GDP). Currently, the ratio exceeds 100%, with forecasts for it to reach 130% in 2035.
The chief executive of JPMorgan Chase, Jamie Dimonhas warned that “we are seeing an abyss. “It’s about 10 years away.” The Secretary of the Treasury, Yanet Yellen has warned that if Washington were to declare default on payments, there would be a financial crisis and a recession in the US that would have repercussions globally because fear would spread among consumers, which would make them spend less. “It would be devastating” (for the world and we warn for the DR).
Covid 19 and the response that the authorities had to give through an unprecedented expansion of public spending contributed to the worsening of the problem. But a fiscal year with little commitment to the health of finances on the part of the Government has also had an impact, which in its opinion acts as if it were above good and evil.
With Trump’s victory, the possibility of addressing the issue of public spending has been raised to defuse the potential debt crisis. Trump’s purpose is to appoint Elon Musk to fulfill that task.
Musk has claimed he can eliminate at least $2 trillion from the federal budget and has said taxpayer money is being wasted. “Let’s get the Government off our backs and out of our pockets”.
However, some economists fear that Trump’s proposed tax cuts would increase the fiscal deficit.
Consequently, they foresee an increase in public debt in their projections. We will have to see if the Trump Government has the formula to generate the income that would compensate for the tax reductions.
Hopefully, the problem that is sought to be corrected with a reduction in administration spending is not generated through the loss of income that the promised tax reductions would bring.
