Washington: “To what extent shall we be able to sustain the continuously increasing debt burden on the US economy, is a worrisome question which frequently pops up in my mind. America’s Debt to GDP ratio of 75%, may not be a reason for scare, but it is certainly a cause of concern serious enough to disturb night’s sleep for many.” That’s how Janet Yellen, head of the US Fed Reserve has expressed her anxiety about the effect of increasing debt burden on the US economy.
US President Donald Trump has brought in a tax reforms bill in the US which is estimated to increase burden of USD1.5 trillion on the budget. There is likely to be a heated debate on this issue in Senate and the ruling Republican party is gearing up to face the challenge. The Republicans have planned to implement the proposed tax reforms by this year-end after obtaining approval of the Senate and getting the President’s signature on the bill.
Concerns expressed by the US Fed Reserve Head assume greater significance against this backdrop. It may be recalled that she was appointed to the Chair of the US Federal Reserve during the presidency of Barak Obama. Yellen has decided to quit her position in near future.
Two months back, President Trump had signed a bill which removed ceilings on the amount of debt that can be raised by the US Government, thus enabling the Government to raise as much debt as it thought fit, upto 8thDecember, 2017.
According to the information released by the American “Congressional Budget Office”, the present level of USD 20 trillion is an all time high level of debt burden on the US economy after the second world war. The debt includes Public debt of USD14.6 trillion and USD5.5 trillion of interdepartmental debts of the administration.
The debt level increased 86% during the 8 years of Obama administration from USD10.7 trillion in 2008 to USD 20 trillion in 2016. Although the total debt upon the US government is that of USD 20 trillion the debt of the country including government debt, industrial credit, mortgages and personal loans reported to be at a staggering USD70 trillion level.
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