Us Borrowing Remain High

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Us Borrowing Remain High

Us Borrowing Will Remain High

Many were hoping that the US borrowing would slow down during the era of Donald Trump. But, the approval of the big beautiful bill has put an end to these hopes.

According to Commerzbank, the bill has still maintained the tax cuts and even introduced new ones. Now, there will be no tax on overtime and tips.

New Tax Breaks Announced

In simple words, this means the USA will not be able to collect as much tax. On the other hand, the spending will increase after the introduction of the new bill.

The end result? The US government will have to borrow money to fund the budget deficit. But in the long run, the message of law will benefit the US Dollar as it will fuel growth.

The bill has also introduced big cuts for the health sector, which would put 12 million people at risk of losing their health insurance.

Meanwhile, the spending on the separation of illegal immigrants in the USA has increased massively. Over the long run, this will affect the US labour supply and will actually limit the growth potential of the country.

According to the government, a 1% increase will be seen in the growth rate after the recent bill. But we all know that such claims are usually made out of thin air and lack any clear basis.

The one thing that's certain after the bill is that the borrowing by the USA will only increase in the coming months. As of now, the debt is equal to 6.5% of the US economic output.

But with all the tax breaks and more spending on deportation efforts, things will get tough for the USA in the coming quarters. The immediate effect will be seen in the US labor market and the healthcare sector.

According to Commerzbank, the long-term effect of this bill will be bad for the US dollar and even the US economy.

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