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## The Approaching Threat of Prolonged Trump Tax Decreases: A Public Debt Emergency?
**Disseminated:** March 25, 2025, 09:18 AM EST
**Principal Realizations:**
* The Congressional Budget Office (CBO) cautions that prolonging the 2017 Trump tax decreases could greater than twofold the U.S. public debt to over 200% of GDP by 2054.
* Wharton School investigators anticipated in 2023 that a debt-to-GDP proportion of 200% would activate a serious financial emergency.
* The CBO’s assessment assumes tax decreases are prolonged without relating spending decreases.
* Republican legislators intend to prolong the tax decreases while proposing noteworthy decreases to government spending, including Medicaid.
The CBO’s freshest appraisal portrays a disturbing picture: prolonging the 2017 Trump tax decreases, particularly in the midst of rising loan costs, could send the U.S. public debt to remarkable levels by 2054.
Assuming Congress stretches out the 2017 Trump tax decreases without monetary changes, the public debt could inflate throughout the following 30 years. The freshest projections propose the debt could arrive at levels considered impractical by market analysts, possibly prompting an administration default and a worldwide monetary breakdown.
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In a letter to Representative David Schweikert (R-AZ), the CBO expressed that prolonging the tax decreases would build openly held debt to 214% of the country’s yearly monetary yield (GDP), an obvious difference to the ongoing 99%. Without augmentation, most arrangements of the Tax Cuts and Jobs Act (TCJA) will lapse toward the year’s end.
The CBO assesses that without prolonging the tax decreases, the debt-to-GDP proportion would arrive at 166% by 2054.
This might greatly affect the monetary structure’s reliability. In 2023, Wharton Business School economists predicted that if the debt-to-GDP ratio surpasses 200%, the national debt will reach a point of no recovery. Governments may not be able to raise enough taxes to pay back lenders at this point, which could cause a financial meltdown that would have an impact on the world economy and the United States.
If future interest rates are greater than the current CBO projections, financial difficulties could build up more rapidly. They predict that by 2054, if interest rates climb by 5 basis points annually until they are 1 percentage point higher than anticipated, the national debt will increase to 250% of GDP.
Republican legislators in charge of the Senate and House of Representatives are drafting a budget for the upcoming year that is anticipated to contain tax and Medicaid cuts, which will make up for some of the lost income. President Donald Trump has vowed to balance the budget and make up for lost income tax revenue by levying tariffs on US trading partners, but trade experts and economists have questioned the proposal.
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