It looks like you're new here. If you want to get involved, click one of these buttons!
Note: Text emphasis in the above report was added.President Trump has tried to radically reshape America’s economy. He has slashed taxes, raised tariffs to their highest levels in almost a century, unilaterally canceled federal spending, pushed down immigration and pressured the Federal Reserve to sharply lower interest rates.
Compared with its projections from January 2025, before Mr. Trump took office, the federal government is now expected to run a $23.1 trillion shortfall over the next nine years, rather than a $21.8 trillion one, a $1.4 trillion wider gap. Those were the findings of the Congressional Budget Office, the nonpartisan scorekeeper, in its annual benchmark forecast for the federal budget released on Wednesday.
The amount of debt held by the public is expected to become much larger than the annual output of the economy, reaching 120 percent of gross domestic product in 2036. That would put the world’s most important economy at risk of a destabilizing debt crisis. “Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” said the director of the budget office.
There is reason to expect that the fiscal situation could become even more precarious. The most expensive policy change made so far by Republicans and Mr. Trump has been the broad income tax cuts they passed last year. That law, which provided its biggest benefits to the rich as it also cut spending on programs for the poor, came in at a total cost of roughly $4.7 trillion over the next nine years, the C.B.O. said. The biggest source of new money, Mr. Trump’s tariffs, is projected to raise roughly $3 trillion over that same time frame.
In reality, though, the cost of the tax cuts could end up far exceeding the revenue generated by the tariffs. When they passed the tax cuts, Republicans took the unprecedented procedural step of locking many of them in permanently, meaning the cuts would require another act of Congress to reverse them, an unlikely event. Indeed, some of the tax cuts Republicans passed last year are only temporary, and lawmakers may renew them in the future, further reducing revenue.
Many of Mr. Trump’s tariffs are mired in deep legal and political uncertainty. The Supreme Court could soon throw many of them out. If the tariffs survive the legal challenge or Mr. Trump replaces them with different levies, a future president could, with a stroke of the pen, immediately slash the remaining import taxes. That would leave the federal government with a far more meager revenue source just as the country confronts the budget crunch created by Social Security, the most expensive federal program. For years, as the population has aged, the amount of money spent on the retirement program has outpaced the amount of tax paid into it by younger working Americans, driving wider deficits.
Social Security’s flagship trust fund is now expected to run out in 2032, a year earlier than previously expected, the C.B.O. said. The exhaustion of the trust fund will force Congress to decide on a new way of financing Social Security to avoid a deep, across-the-board cut to benefits. At the same time, Mr. Trump’s crackdown on immigration is also putting pressure on America’s fiscal situation, the C.B.O. said. The budget office expects the American population to have 5.3 million fewer people in 2035 than it previously expected, reducing projected tax revenue, with an overall budget hit of roughly $500 billion over that time frame.
At nearly $1 trillion last fiscal year, the net cost of interest on the debt ranks with Social Security and Medicare as one of the government’s biggest expenses. The United States already spends more financing its debt than it does on defense. By 2036, the budget office projected that interest costs could nearly match the total discretionary spending approved by Congress every year.
Mr. Trump has agitated for the Federal Reserve to lower short-term interest rates to reduce the government’s borrowing costs, part of a broad attack on the central bank’s independence. But the Fed sets interest rates to hold down inflation and keep employment stable, not to reduce borrowing costs for the federal government. If investors started to believe that the Fed instead set short-term interest rates in response to demands from the White House, that could actually raise long-term interest rates, further adding to the government’s borrowing costs.
Sometimes perfection really is the enemy of the good. Christine Benz, Morningstar’s personal finance and retirement guru, has come up with some “good enough” solutions for portfolios and financial plans that work well for most of us.
https://rch1.com/savers-matchThe Saver’s Match is a federal program enacted as part of the SECURE 2.0 Act of 2022, and as set forth in Section 103. This law repeals and replaces current law, which provides a nonrefundable tax credit (“Saver’s Credit”) for certain individuals who make contributions to workplace retirement plans or to IRAs, with a federal matching contribution that must be deposited into a taxpayer’s IRA or qualified retirement plan.
https://www.treasurydirect.gov/savings-bonds/ee-bonds/may-1997-through-april-2005/These EE bonds have 2 maturity dates
EE bonds that we issued from May 1997 through April 2005 have an original maturity date part way into the bond's 30-year life, as well as a final maturity date at the end of the bond's 30-year life.Issue date of EE bond Original maturity date
May 1, 1997 through May 1, 2003 17 years from issue date
June 1, 2003 through April 1, 2005 20 years from issue date
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
