Since the spokesman Mike Johnson and the Republicans in the House of Representatives were struggling to pass the budget tax and spending bill last week-they eventually obtained it with one vote-my mental return more than three decades to February 1993, when, at a meeting in the Roosevelt Hall in the White House, President Bill Clinton, who missed some of the economic match, met.
Last November, Clinton swept a victory over a promise to revive a slow economy, which was blamed on its effects on the occupants of Republicans, George E. Bush. During the campaign, Clinton talked about raising spending on sectors such as education, infrastructure and scientific research. However, at the February meeting, the best economic consultant in Clinton, including Bob Robin, the then president of the National Economic Council, and Ladid Bentun, the treasury minister at that time, were defending significant budget discounts. They argued that this policy will reassure investors about the budget deficit, which the government funds by issuing treasury bonds, encouraging a gathering in bond prices and low borrowing rates. (When bond prices rise, interest rates decrease.) In the 1994 book.Agenda“Bob Woodward tells how some Clinton’s political agents felt frustrated because of the president’s embrace of financial austerity.” How many votes does the dreaded bond market get? “Houard Paster, a member of the previous pressure groups of the United Automobile Union, said that Clinton appointed to communicate with Congress, at some point of discussions.”
Despite the protests of Passter and others, the hawks won the deficit. In August 1993, Congress approved the tax and spending bill to reduce the deficit by half a trillion dollars over a period of five years. James Carville, a Clendon strategic expert, James Carville, noticed, “I used to think that if there was a reincarnation, I wanted to return as a president, the Pope or a biblical game.
Everyone, with the exception of Johnson and his colleagues, apparently. On Friday, May 16, MOODY rackets reduced the US government’s credit rating, a move that left the country without a tripartite classification in a major agency for the first time in more than a century. Over the past decade, the “federal debt has risen sharply due to the ongoing financial deficit,” Modi said in a statement. “During that time, federal spending has increased while tax cuts were reduced by government revenues.” The provisions of the House of Representatives Tax Bill, which include expanding the scope of the Republican tax discounts for 2017 and eliminating taxes on advice and additional work, is certainly that it increases deficit and debt to further. According to the responsible federal budget, they will add another $ 3.1 trillion to national debt in the next ten years.
After the MOODY level decreased, the bond prices decreased, and interest rates in the market increased. Last Wednesday, when the Treasury held a auction for long -term bonds, investors demanded higher returns to buy them. Despite these developments, Republicans in the House of Representatives, in Donald TrumpRequest, pushed through the great beautiful bill. (Yes, it is already called that). Where the vote was taking place on Thursday morning, bond prices fell. After that, they recovered a little, but the story is not over.
With the transfer of interest to the Senate, where Republican leaders hope to pass a draft law by the fourth of July, some Wall Street analysts expect that the markets will impose a change in the path – a scenario that has a very modern precedent. At the beginning of April, Trump “Editing Day“The announcement of the high tariff in the sky over more than a hundred countries led to a significant sale in the stock market and a sudden rise in bond returns, which could be a sign of distress somewhere in the financial system. These developments prompted Trump to decline and declare this in mutual comments,” will “suspend the capital.” Hedging box, He said Bloomberg Last week. “This is the only way. It is always the bond market that brings discipline.”
Given that some former presidents, including Barack Obama, were able to reduce the deficit in relation to the gross domestic product without a crisis in the bond market, and this is somewhat abbreviated. But at the present time, with the control of Republicans who control the congressions – and with Trump’s vast majority of its members – the markets interact negatively with the reckless economic policies of the administration. Bond rates also affect mortgage rates, which directly affect ordinary Americans. After lowering MOODY, when bond returns rose, the cost of home loans increased above seven percent. Increased mortgage rates is not good news for any administration, and we can safely assume that Trump, as a real estate developer, is closely monitoring. We also know that he is watching the bond market. After he turned on the definitions, the market settled and claimed somewhat, which led him to note, “The bond market is very difficult … but if you look at it now, this is beautiful.”
This announcement was premature. The last height of bond revenues reflects a growing recognition of Wall Street that Trump’s policies of spending and spending are not just responsible such as customs tariff policies. “What we learn is that there will be no financial financial unification,” Krishna Joe, an economic expert in Evercore ISI, He said the Wall Street Journal. “The United States will continue to run a very large deficit as much as it can see the eye … with a greater deficiency the next time we face a contraction or emergency.”
What is the “very large” size? In 1992, in the year that Clinton and his economic team had already gathered in the Roosevelt room, the annual deficit reached 4.5 percent of GDP, and the total federal debt kept by the public was 46.3 percent of GDP last year, and the equivalent numbers were 6.3 per cent and 96.2 percent. Upon issuance, by 2035, Moody’s’ Moody’s expected if the Republican Party’s draft law is scheduled to be enacted, the numbers of deficit and debt have increased to nine percent and an area of one hundred and thirty percent, respectively.
There is no specific formula when the deficit and debt reach the levels of crises, but this comprehensive level of debt will exceed even those seen at the end of World War II, when the United States government, for years, was funding the fight against the axis forces. On the other side of the professor’s book, many foreign governments and institutional investors are still dependent on American treasury bonds as safe and liquid havens for their money. As the head of the Central Bank in Switzerland has indicated after MOODY lowering, “There is currently no alternative to them.”
