It shot up after sweeping tax cuts by Donald Trump in 2017 and huge stimulus spending during the pandemic. Mr Trump has pledged to renew the tax cuts, due to expire next year, if he defeats Joe Biden in this year’s presidential election.
Former British prime minister Liz Truss. AP
“We have the potential for some changes that seem modest – or maybe start off modest and then get more serious – to have outsized effects on interest rates, and therefore on the fiscal trajectory,” Mr Swagel said.
Ms Truss quit after just 45 days as UK prime minister after her plan to pay for deep tax cuts with more debt backfired, sending the country’s borrowing costs sharply higher.
Mr Swagel’s remarks to the FT came a day after the independent watchdog issued new longer-term economic projections, which showed debt levels rising to 166 per cent of GDP in 2054.
Fitch stripped the US of its AAA rating last year, citing concerns over “a high and…
