Goldman Sachs warns: U.S. debt is approaching World War II peak levels, delaying deficit resolution will lead to severe fiscal tightening

ChainCatcher news, according to Jinshi reports, Goldman Sachs pointed out that Trump's spending plan cannot prevent U.S. national debt from rising to "unsustainable" levels, with current debt levels only second to those during World War II. Next year, the U.S. will need to pay $1 trillion in interest on $36 trillion in national debt, an amount exceeding the total of Medicare and defense spending. Goldman Sachs economists warned that if U.S. lawmakers delay addressing the deficit issue, future measures may require historically rare fiscal tightening to avoid a crisis. "Large-scale fiscal consolidation could lead to a decline in GDP, which in turn may not reduce the debt-to-GDP ratio. More dangerously, there may be a choice to print large amounts of money to repay debt—historical lessons from Germany's Weimar Republic in the 1920s indicate that such actions would trigger hyperinflation and social unrest."

The nonpartisan Congressional Budget Office estimates that the Republican spending bill will increase the deficit by $2.8 trillion over the next decade. The White House and some Republican lawmakers argue that the forecast should not include the cost of extending Trump's 2017 tax cuts, which are set to expire this year if not extended.