The CBO warns that the US federal government debt will reach 123% of GDP by 2034 with Trump's tax cuts in place and possible bond market crisis.
The rosy assumptions used by the CBO forecast are underpinned by current market views on interest rates. If ex-President Donald Trump's tax cuts mainly stay in place, the burden gets even higher.
The Congressional Budget Office (CBO) has warned that the US federal government debt is on a path from 97% of GDP last year to 116% by 2034, even higher than in World War II. The CBO forecasts released earlier this year are underpinned by rosy assumptions and plugging in current market views on interest rates raises the debt-to-GDP ratio to 123% in 2034. If ex-President Donald Trump's tax cuts mainly stay in place, the burden gets even higher. The CBO also warns that a bond market crisis of the kind that engulfed the United Kingdom 18 months ago could happen if policymakers try to take action and there is a market reaction.
The Congressional Budget Office (CBO) warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034.
Assuming that ex-President Donald Trump's tax cuts mainly stay in place, the burden gets even higher.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(80%)
The article is deceptive in several ways. Firstly, the CBO's projections are presented as a worst-case scenario when in reality they are underpinned by rosy assumptions. This misrepresentation of facts creates a false sense of urgency and danger for readers who may not be aware that the actual outlook is likely worse than what was stated. Secondly, the article uses sensationalism to grab attention with phrases such as 'higher even than in World War II' which exaggerates the severity of the situation. Lastly, there are no sources disclosed or quoted in this article.
The CBO forecasts released earlier this year are underpinned by rosy assumptions.
Fallacies
(85%)
None Found At Time Of
Publication
Bias
(85%)
The author of the article demonstrates a clear bias in favor of maintaining Trump's tax cuts and downplaying their impact on the debt. The author uses phrases like 'rosy assumptions', 'worse than WWII', and 'even higher' to suggest that the CBO projections are unrealistic or undesirable, while ignoring alternative scenarios or solutions. The author also implies that Trump's tax cuts are beneficial for the economy by using them as a baseline assumption without considering their long-term effects on fiscal sustainability and debt service.
`assume — as most in Washington do — that ex-President Donald Trump’s tax cuts mainly stay in place, and the burden gets even higher.
`Plug in the market’s current view on interest rates, and the debt-to-GDP ratio rises to 123% in 2034.`
The United States risks a bond market crisis of the kind that engulfed the United Kingdom 18 months ago.
US government debt continues to break records, fuelling concerns about the burden it places on the economy and taking a toll on America's credit rating.
In an interview with Financial Times, CBO director Phillip Swagel said US government debt is on an unprecedented trajectory.
The danger of a bond market meltdown lies in what happened to UK when policymakers tried to take action and there was a market reaction.
As higher interest rates raise the cost of paying its creditors, on track to reach $1 trillion per year in 2026, bond markets could snap back.
UK government bonds sold off sharply partly in response to plans by Truss to issue more debt in order to pay for tax cuts.
The Bank of England was ultimately forced to intervene and pledged buy gilts on whatever scale is necessary.
Economists have been warning for years that the US debt pile is reaching dangerously high levels and Fitch stripped the United States of its immaculate triple-A credit rating in August citing a high and growing general government debt burden.
There could be more borrowing to come if Trump is re-elected president in November.
In fiscal year 2023, interest costs on a common measure soared to $659 billion which ended on September 30, up from the previous year and nearly double what it was in fiscal year 2020.
The government spent more to service its debt than it did on each of housing, transport and higher education in fiscal year 2023.
US government debt is set to keep rising according to CBO report last week which stated that such large and growing debt would slow economic growth, push up interest payments to foreign holders of US debt, pose significant risks to the fiscal and economic outlook.
It could also cause lawmakers to feel more constrained in their policy choices.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(50%)
The article is deceptive in several ways. Firstly, the author uses sensationalist language such as 'risks a bond market crisis' and 'on an unprecedented trajectory', which creates fear and alarm for readers without providing any concrete evidence of impending doom. Secondly, the CBO director's statement about higher interest rates raising the cost of paying creditors is misleading because it implies that this is solely due to government debt when in fact other factors such as inflation also contribute to rising interest rates. Thirdly, the article uses selective reporting by focusing on UK bond market rout and Truss's plans for unfunded tax cuts while ignoring similar situations in other countries or US policies that have contributed to the current debt crisis. Lastly, the author fails to disclose any sources used in their analysis.
The article uses sensationalist language such as 'risks a bond market crisis' and 'on an unprecedented trajectory', which creates fear and alarm for readers without providing any concrete evidence of impending doom. For example, the author writes:
Fallacies
(85%)
The article contains several fallacies. The author uses an appeal to authority by citing the Congressional Budget Office (CBO) as a source for their information without providing any context or explanation of why this particular organization's opinion is relevant or trustworthy. Additionally, the author commits a false dilemma by presenting only two options: either the US government will take action to address its debt and face market backlash, or it won't take action and risk a bond market meltdown. This oversimplifies complex issues and ignores other potential solutions that may be available. The author also uses inflammatory rhetoric by describing the situation as a
The danger is what the UK faced with former Prime Minister (Liz) Truss, where policymakers tried to take an action, and then there was a market reaction to that action.
Bias
(100%)
None Found At Time Of
Publication
Site
Conflicts
Of
Interest (50%)
None Found At Time Of
Publication
Author
Conflicts
Of
Interest (50%)
The author has a conflict of interest on the topic of US government debt as they are an independent fiscal watchdog. The article discusses the CBO's warning about America being at risk of a bond market meltdown due to $35 trillion in US government debt and $1 trillion per year in interest payments by 2026, which is not disclosed.
The article discusses the CBO's warning without disclosing that it is an independent fiscal watchdog.
The author mentions their role as an independent fiscal watchdog when discussing the CBO's warning about America being at risk of a bond market meltdown due to $35 trillion in US government debt and $1 trillion per year in interest payments by 2026.
The Congressional Budget Office (CBO) warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034.
Assuming that ex-President Donald Trump's tax cuts mainly stay in place, the burden gets even higher.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(80%)
The article is deceptive in several ways. Firstly, the CBO's projections are presented as a warning that US federal government debt will reach 116% of GDP by 2034. However, this projection is based on rosy assumptions and does not take into account market views on interest rates or Trump's tax cuts staying in place. The article then presents Bloomberg Economics simulations which show the debt-to-GDP ratio rising to 123% in 2034 under these conditions, but fails to mention that this is only one of many possible outcomes and does not provide any context for how likely it is. Additionally, the article quotes Treasury Secretary Janet Yellen saying that Biden's budget will ensure fiscal sustainability and manageable debt-servicing costs without providing any evidence or specific details on how this will be achieved.
The CBO's projections are presented as a warning that US federal government debt will reach 116% of GDP by 2034. However, this projection is based on rosy assumptions and does not take into account market views on interest rates or Trump's tax cuts staying in place.
The article then presents Bloomberg Economics simulations which show the debt-to-GDP ratio rising to 123% in 2034 under these conditions, but fails to mention that this is only one of many possible outcomes and does not provide any context for how likely it is.
Fallacies
(85%)
The article contains several fallacies. The author uses an appeal to authority by citing the Congressional Budget Office (CBO) as a source for their information without providing any context or criticism of the CBO's methods or assumptions. Additionally, the author uses inflammatory rhetoric when they describe the debt-to-GDP ratio as being
The article contains several fallacies.
<br>The author uses an appeal to authority by citing the Congressional Budget Office (CBO) as a source for their information without providing any context or criticism of the CBO's methods or assumptions. Additionally, the author uses inflammatory rhetoric when they describe the debt-to-GDP ratio as being
examples
Bias
(85%)
The author uses language that implies the CBO's projections are rosy and underestimate the true debt-to-GDP ratio. The author also quotes Treasury Secretary Janet Yellen as saying that reducing deficits is necessary for fiscal sustainability, but does not provide any context or evidence to support this claim.
“I do believe we need to reduce deficits and to stay on a fiscally sustainable path,” Treasury Secretary Janet Yellen told lawmakers in February.
In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path
, The CBO projected that the national deficit would rise significantly in relation to GDP over the next 30 years, reaching 8.5% of GDP in 2054.
, Some budget experts have cast doubt on Swagel's alarm and pointed to improved deficit projections in recent years.
Accuracy
The Congressional Budget Office (CBO) Director Phillip Swagel warned the United States could suffer a market shock similar to what was seen in the UK during former Prime Minister Liz Truss's brief stint leading Britain.
Some budget experts have cast doubt on Swagel's alarm and pointed to improved deficit projections in recent years.
Deception
(50%)
The article is deceptive in several ways. Firstly, the author uses sensationalism by stating that the US could suffer a market shock similar to what was seen in the UK during Liz Truss's brief stint as Prime Minister. This statement is not supported by any evidence and exaggerates the potential consequences of rising debt levels.
The article states that 'the U.S. has unprecedented fiscal trajectory'. However, this statement is misleading because it implies that the US's current financial situation is unique when in fact many countries have faced similar challenges before.
Fallacies
(75%)
The article contains an appeal to authority fallacy by citing the warning of a budget watchdog without providing any evidence or context for their expertise. Additionally, there is a dichotomous depiction of the potential consequences of rising interest rates as either positive or negative depending on who is making the statement.
Allison Robbert Congressional Budget Office Director Phillip Swagel speaks at a House Budget Committee hearing to discuss the Congressional Budget Office’s Budget and Economic Outlook at the Capitol on Wednesday, February 14, 2024.
Truss roiled markets in October 2022 as she pressed for significant tax cuts, including changes lessening the tax burden on wealthier individuals without offsets.
In an interview with the Financial Times this week, Swagel discussed the country’s rising debt.
Bias
(80%)
The author Aris Folley is biased towards the idea that a market shock could occur in the US due to its rising debt. The article mentions how former Prime Minister Liz Truss's actions led to a market reaction in Britain and uses this as an example of what could happen if policymakers take action without considering its effects on bond markets. This is an example of ideological bias, where Folley assumes that the US should not follow the same path as other countries due to their perceived success or failure. The article also mentions how some budget experts cast doubt on Swagel's alarm and argue that improved deficit projections in recent years mean there is less reason for concern. This is an example of monetary bias, where Folley assumes that the US should not follow the same path as other countries due to their perceived success or failure.
The article mentions how former Prime Minister Liz Truss's actions led to a market reaction in Britain and uses this as an example of what could happen if policymakers take action without considering its effects on bond markets. This is an example of ideological bias, where Folley assumes that the US should not follow the same path as other countries due to their perceived success or failure.
The article mentions how some budget experts cast doubt on Swagel's alarm and argue that improved deficit projections in recent years mean there is less reason for concern. This is an example of monetary bias, where Folley assumes that the US should not follow the same path as other countries due to their perceived success or failure.
Site
Conflicts
Of
Interest (50%)
Aris Folley has a conflict of interest on the topic of Congressional Budget Office (CBO) as they are reporting on Phillip Swagel who is CBO Director. Additionally, Aris Folley also reports on Liz Truss and British debt crisis which could be seen as having an affiliation with her country's national debt.
Aris Folley reports on Liz Truss's views on British debt crisis which could be seen as having an affiliation with her country's national debt.
Aris Folley writes: 'Congressional Budget Office (CBO) Director Phillip Swagel has been a vocal critic of the Biden administration’s budget proposals, arguing that they would lead to higher deficits and more government spending.'
