Trump administration accelerates deficit reduction plan, fears Democrats controlling Congress
Macro
U.S. Treasury Secretary Scott Bessent said the administration may need to accelerate its push for a deficit reduction plan through Congress by the end of this year if Democrats win the midterm elections in November and gain a majority in either chamber. Bessent noted that if Democrats win, the plan would need to pass during the transition period between the November 3 election and January 3, 2027, when new members take office. He is working with Russ Vought, Director of the U.S. Office of Management and Budget, to craft a fiscal consolidation plan but has not disclosed whether it would cut welfare or Medicare spending or raise taxes. Meanwhile, the Congressional Budget Office estimates the government is likely to spend nearly $2 trillion more than it takes in this year. The deficit has been widening due to pandemic-era spending and Trump's tax cuts. Republicans currently hold majorities in both chambers, but losing them to Democrats would open the door to obstructing Trump's policies for the remainder of his term.
