Washington (AFP) - As part of a pledge to "Make America Great Again," President Donald Trump and Republican lawmakers are pursuing aggressive economic stimulus while slashing taxes at the same time.
The result, budget analysts say, is likely to be swelling debts and deficits for the world's largest borrower.
- A ballooning deficit -
America's budget deficit was already on an upward trajectory, thanks to an aging population and rising health costs. But it is now poised to take off.
After December's sweeping tax cuts, which are expected to cut federal revenues by $1.5 trillion over ten years, the budget deal Trump signed Friday calls for an additional $300 billion in defense spending over two years.
The White House and lawmakers have also huddled over a $1.5 trillion plan to upgrade the nation's infrastructure, with perhaps several hundred billion in taxpayer funds contributed in a possible public-private partnership.
Former President Barack Obama's administration acted to reduce the deficit after the emergency spending in the wake of the 2008-2010 Great Recession, bringing it down from 9.8 percent of GDP in 2009 to 2.4 percent by 2015.
But having reached $666 billion in the 2017 fiscal year, it is on track to hit $1 trillion in 2019, according to the Committee for a Responsible Federal Budget.
- The debt and investors -
At more than $20 trillion, or greater than annual GDP, the United States's debt is already at its highest level since World War II.
According to JPMorgan Chase, borrowing by the US Treasury will climb in fiscal 2018 to $1.4 trillion from $550 billion in 2017, nearly tripling.
William Dudley, the outgoing president of the Federal Reserve Bank of New York, said Thursday that such ballooning deficits could drive up yields on sovereign bonds, and thus raise borrowing costs for the federal government.
Even before accounting for the new borrowing, rising interest rates could see US borrowing costs double in the next 10 years, according to the Congressional Budget Office.
- The GOP's about-face -
Terms like "fiscal cliff" and "budget sequester" -- catch phrases of the era of Republican budget orthodoxy before Trump's election -- have fallen by the wayside.
The movement for fiscal restraint, which gave rise to the Tea Party after President Barack Obama took office in 2009, seems to live on among a few holdouts in the Republican majority.
House Speaker Paul Ryan hailed December's tax cuts, praising Trump's "exquisite presidential leadership."
That is in sharp contrast with his warnings in 2012 that Obama's fiscal policies would unleash a "red tidal wave of debt."
- Who will pay? -
The White House and Treasury Secretary Steven Mnuchin say Decembers' tax cuts should pay for themselves. Mnuchin argues that rising growth will offset falling revenues.
The Democrats warn that the mounting sovereign debt is a "ticking time bomb," in the words of former Treasury Secretary Jack Lew.
"The next shoe to drop is going to be an attack on the most vulnerable in our society," Lew said last month.
"We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security. One could not have made up a more cynical strategy."