The tax cuts bill currently being debated by the US Senate will add another US$3 trillion (A$4.6 trillion) to US debt. President Donald Trump calls it the “big, beautiful bill”; his erstwhile policy adviser Elon Musk called it a “disgusting abomination”.
Foreign investors have already been rattled by Trump’s upending of the global trade system. The eruption of war in the Middle East would usually lead to “flight to safety” buying of the US dollar, but the dollar has barely budged. That suggests US assets are not seen as the safe haven they used to be.
Greg Combet, chair of Australia’s own sovereign wealth fund, the Future Fund, outlined many of the new risks arising from US policies in a speech on Tuesday.
As investors turn cautious on the US, at some point the surging US debt pile will become unsustainable. That could risk a financial crisis. But at what point does that happen?
