Under the pressure of Donald Trump, the congress is entering the last phase of negotiations on its tax bill. A compromise must still be found in the Senate, before a final vote in the House of Representatives. In addition to the tax cuts, the text also provides for an increase in the debt ceiling, which will lead to a wave of bond emissions in the second half.
Donald Trump exhorted Republican senators on Tuesday to advance his vast bill on tax cuts and public spending, while moderates and conservatives of his own camp oppose the planned budget cuts.
This project, which Donald Trump himself baptized the “One Big Beautiful Bill Act”, plans to extend the tax cuts voted in 2017, to finance the hardening of migration policy and increase military spending.
If these measures are consensual among the Republicans, cuts in social programs divide. Some senators wish to limit the reductions affecting, for example, Medicaid health insurance intended for the most modest Americans, while the hard wing claims deeper cuts to contain the growth of the federal deficit.
Whatever the compromise found on the savings, this tax law will increase the deficit on the next decade. According to projections of the Congress Budget Budget (CBO), the version of the text adopted last month by the House of Representatives would dig the deficit of at least $ 2,800 billion.
Donald Trump S’impatiente
But republican leaders seem to focus more on the short -term impact of tax cuts. This is evidenced by this video broadcast by the White House, with this slogan: “It’s My Money and I Need It Now”.
A sequence that shows the impatience of Donald Trump, who continues to put pressure on his elected officials to have the tax law adopted before July 4: “To my friends from the Senate, lock up if necessary, but do not go home until the agreement is concluded this week. Work with the House of Representatives to adopt it immediately. No one goes on vacation as long as it is not done,” the American president on Tuesday.
The Senate must still find a compromise before the text returns to the House for a final vote.
The secretary of the Treasury, Scott Bessent, who participated Tuesday in a lunch of the Republican senators, said he was confident about the adoption of the text before July 4. “I am convinced that what the Senate will send to the House will be adopted very quickly”.
The bond market is preparing
For Scott Bessent, the issue is all the more important since the text also includes an increase in the federal debt ceiling of $ 5,000 billion. However, the treasure approaches the “x date”, the date beyond which it will no longer be able to finance itself.
The head of the Republican majority in the Senate, John Thune, wanted to be reassuring, saying that the upper room remained on the right track to adopt the text this week. The president of the House of Representatives, Mike Johnson, assured that the House would quickly grasp it. The Republicans currently control the two chambers of the Congress.
Since the beginning of the year, the Treasury has limited emissions and has used its current account more because the debt ceiling, currently set at $ 36,100 billion, has already been reached. Several analysts are expecting a wave of emissions up to $ 1,000 billion in the second half.
Current account of the American Treasury. Sources: Treasury Department, Peterson Institute
Establishments that should be focused on short matures. This is already what the previous administration had done, with the aim of avoiding borrowing long -term from high rates. A strategy criticized at the time by Scott Bessent. But the recent long rates formed the treasure not to solicit the market too much on long maturity.
If the emission volumes to be absorbed by the bond market seem high, record outstanding monetary funds ($ 7,400 billion in June) should nevertheless help digest this offer.
