IMF Warns Trump Tax Bill Would Deepen U.S. Deficit and Debt Burden

The International Monetary Fund warned that the sweeping tax-and-spending bill promoted by President Donald Trump would widen the U.S. fiscal deficit and undermine efforts to reduce the federal debt. "There is broad consensus that the legislation runs counter to putting the debt-to-GDP ratio on a decisive downward path," IMF spokesperson Julie Kozack told reporters. The measure extends the 2017 tax cuts, adds new breaks for tips and overtime pay and, according to Congressional Budget Office estimates, would raise the cumulative deficit by about $3.4 trillion over the next decade. That would push the debt load—already close to 98 percent of gross domestic product—still higher, the Fund said, reiterating its call for a gradual but credible plan to curb chronic shortfalls. Kozack said the IMF is analysing the bill’s economic impact and will fold its findings, along with the effect of higher U.S. tariff rates due to be implemented after 9 July, into an update of its World Economic Outlook later this month. The legislation cleared the House of Representatives on 3 July by a narrow margin and is expected to be signed by Trump on 4 July. While it lifts the federal borrowing limit and averts a near-term default, the IMF cautioned that Washington still needs a domestic consensus on measures—potentially including revenue increases—to stabilise the public finances.