Goldman Sachs Warning: U.S. Debt Nearing 'World War II' Peak, Failure to Address Deficit Could Lead to Severe Austerity

BlockBeats News, June 20th, Goldman Sachs pointed out that Trump's spending plan cannot prevent the U.S. national debt from rising to an "unsustainable" level, with the U.S. debt level currently second only to that of World War II. Next year, the U.S. needs to pay $1 trillion in interest on its $36 trillion national debt, exceeding the sum of Medicare and defense spending. Goldman Sachs economists warned that if U.S. lawmakers delay addressing the deficit issue, the future may require unprecedented fiscal austerity to avoid a crisis. "A large-scale fiscal consolidation could lead to a GDP contraction, which may not reduce the debt-to-GDP ratio. More dangerously, there may be a choice to print a large amount of money to repay the debt—lessons from the Weimar Republic in the 1920s suggest that this operation will trigger hyperinflation and social unrest."

The non-partisan Congressional Budget Office estimates that the Republican spending bill will increase the deficit by $2.8 trillion over the next decade. The White House and some Republican lawmakers argue that the forecast should not include the cost of extending Trump's 2017 tax cut policy, which will expire this year if not extended. (Golden Finance)